A virtual data room (VDR) is an electronic repository that allows collaboration and sharing of sensitive information in an encrypted, secure environment. VDRs are used by companies to protect private data from cyberattacks and downloading and viewing without authorization especially during significant business transactions like M&A deals.
The benefits of an encrypted VDR for businesses that wish to protect their intellectual property and confidential information far outweighs the risks associated with the traditional methods of sharing files, such as cloud storage or email. Data leaks are costly to businesses in terms of time, money and reputation. The most effective way to prevent catastrophe is to establish a robust security system.
VDR security features include multi-factor authentication to identify users and granular permissions to manage access to digital files and documents and audit logs to track the activity of files. Regular data backups ensure that the data stored in VDRs is restored if the system fails, or is the victim of a cyber-attack.
Businesses looking to purchase VDRs should consider that VDR should choose one that uses industry-leading encryption technology to make sensitive data unreadable during transmission and provide a safety net in the event that an intruder user gains access to a document/file. Advanced security measures, such as MFA or login monitoring to monitor the IP address, device’s location and user location, can be employed to stop data breaches and other security breaches of various kinds.
Companies that vdr providers are regulated by regulatory agencies such as the FCA must ensure that their VDR provider’s policies regarding data handling align with these regulations. This will ensure that any complaints or issues are addressed swiftly and with respect which reduces the chance of legal pitfalls and damage to a company’s reputation.
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