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Virtual data rooms are secure data online repositories accessible from anywhere, anytime. Although the primary function of data room software is safe data storage, it is used in medical research, litigation, mergers, acquisitions, private equities, the healthcare sector, and real estate transactions.
Data security is the premium selling point of VDRs, but what makes data rooms especially special in this regard? Or putting it simply, what is a secure virtual data room? Let’s find it out.
What is secure online data room software?
A secure online or electronic data room is a cloud-based data storage facility hosted by certified virtual data room providers. Any professional, business, enterprise, corporation, or government organization can use data room services for the safe storage and sharing of important business or personal data.
Secure virtual data rooms are also commonly used for significant business transactions like initial public offerings, fundraising, capital asset acquisitions, joint ventures, and strategic partnerships.
Read on to learn more about security in virtual data rooms.
Top 10 elements that make virtual data rooms secure
Whether you want to subscribe to data room services for data storage, due diligence, data sharing, or online communication, these 10 features must be looked for in any vendor you choose.
1. ISO Compliance
ISO is the world’s largest standards development organization which is accepted in over 160 countries. ISO compliance means the virtual data room must comply with ISO’s data security standards ISO 27081 and ISO 27001. ISO 27081 compliance is proof that the data room employs the strongest data security measures.
2. Robust data encryption
Data encryption is another great security feature that allows you to store or share data in an encrypted form, and only the destined or authorized user can decode the encrypted file. It is important to note that both data and the document stored or shared in the virtual data rooms are encrypted.
3. Diverse document access permissions
Document access permission is a vital feature in any electronic data room because it helps the management control the flow of information in the VDR. The data room administration must be able to control who can or cannot access, edit, download, save, or print specific documents. Similarly, the administration must be allowed to revoke document access anytime.
4. Digital watermarks
Digital watermarks are usually hidden marks (images, audio, video, or text) that a file owner can embed in the document. Digital watermarks are very useful when it comes to defending your copyrights. They can help track any changes made in that document and details of the user who made those changes.
5. Two-step verification
Two-step verification is a basic yet very powerful security feature. It restricts any wrongful or unauthorized entry into the data room software. Usually, the users log in after entering their passwords and temporarily generate secret codes. A user may also be asked to identify their recent activities in the data room – and this is where hackers can easily get caught.
6. Remote purging
Remote device purging is a relatively new feature in online data room software, but it is very handy. Using this feature, the data room management can easily remove any device (and any documents stored on it) from the VDR anytime. Management usually uses this feature to protect the data room if a VDR user loses their device. However, not many data room vendors are offering this feature.
7. Built-in NDA templates
NDA or non-disclosure agreement is a legal contract legally binding the party signing the NDA to follow the terms and conditions mentioned in the contract. In simple words, NDAs prevent misuse of the data, and the signing party can be sued for compromising the agreement.
NDA templates are very effective when you are dealing with external parties during business transactions or data sharing. It is highly recommended to look out for customizable NDA templates and the electronic signature feature in the VDR.
8. Audit logs
Audit logs or audit trails are detailed data room activity reports. Audit logs give you minute-by-minute reports of all the activities performed in the data room. You can easily see what the data room users are doing. Audit trails are technically a hidden eye that holds everyone in the data room accountable for their actions.
9. FINRA Compliance
FINRA, or Financial Industry Regulation Authority, is the biggest independent regulatory authority in the United States that handles all the securities firms operating in the country. FINRA basically provides protection to investors by ensuring that the security industry is operating fairly.
10. Fence View mode
“Fence View” mode is an amazing document security feature in VDRs. Once you activate this feature on any document, no user can scan, photograph, or screenshot that document. Fence View is handy when you are presenting very highly confidential data to external parties.
Rounding it up
Data security is the basic essence and a primary selling point of virtual data rooms. Although different data room vendors come with new and unique security features, it is important to look for the basic features in any data room software you are buying. Compare virtual data rooms by the features we mentioned above and make your choice of a suitable solution.