A virtual data room (VDR) is an electronic repository that allows collaboration and sharing of sensitive information in a secure, encrypted environment. VDRs are commonly used by companies to safeguard confidential data from cyberattacks and unauthorized viewing or downloads, especially during major business transactions like M&A deals.
For companies looking to protect their intellectual property as well as confidential data, the advantages of using secure VDR outweigh any risks associated with traditional file-sharing options like cloud storage or email. Data leaks are costly to companies in terms of time, money and even reputation. The most effective way to prevent disaster is to implement an effective security system.
Typical characteristics of VDR security include multi-factor authentication to verify user identities, granular settings for permissions for controlling access to documents and digital files and audit logs to track the file’s activity. Regular backups of data assure that data stored in VDRs can be recovered in the event that the system fails, or is the victim of a cyber-attack.
Companies looking for VDRs should consider that VDR should consider one that uses industry-leading encryption technology to scramble sensitive data during transmission and offer a fail-safe in the event that an unauthorised user gains access to the file or document. Advanced security measures like MFA or login monitoring that monitors IP address, device location as well as the location of the user, can be used in order to prevent data breaches and other types of security violations.
Companies that are regulated by regulatory bodies such as the FCA must ensure that their VDR provider’s policies for handling data align with these regulations. This ensures that any issues or complaints will be dealt with efficiently and swiftly, which reduces the risk of legal problems and damage to a company’s reputation.
