A virtual data room (VDR) is an electronic repository that allows collaboration and the sharing of sensitive data in a secure, encrypted environment. VDRs are used by companies to safeguard confidential information from cyberattacks and unauthorized viewing or downloading, especially during key business transactions such as M&A deals.
The benefits of having a secure VDR for companies that want to protect their intellectual property and proprietary information outweigh the risks that are associated with traditional file-sharing methods like email or cloud storage. Data leaks can cost businesses time, money, and reputation and the best method to avoid a disaster is to establish a solid security program.
VDR security features include multi-factor authentication for user identification, granular permissions to control access to documents and digital files and audit logs to track the activity of files. Regular backups of data ensure that information stored in VDRs is recovered if the system fails or is the victim of a cyber-attack.
Companies looking for VDRs should consider that VDR should choose one that is equipped with the latest encryption technology that is able to scramble sensitive data while it is being transmitted and provide a failsafe in the event that an unauthorized user is granted access to a document/file. Advanced security measures, such as MFA or login monitoring to check IP address, device location as well as the location of the user, can be employed to protect against data breaches and other security violations.
Companies regulated by regulatory bodies such as the FCA should also make sure that the policies on handling data of their VDR provider are in line with the regulations. This will ensure that any issues or complaints are handled quickly and fairly, reducing the risk for legal pitfalls and damage to a company’s reputation.
