What is a Data Room?

Avatar for wadminwby wadminw
October 3, 2023

A data room is a storage option for electronic files that lets documents be kept in a secure environment. It also comes with a variety of features to aid with the due diligence. These tools include annotations as well as granular access permissions activity tracking, and watermarking.

Data rooms are typically used to provide security documents to clients (SOC 2 docs or compliance datazoning.net/how-are-virtual-data-rooms-protected-from-sudden-blackouts certifications) in order to facilitate due diligence. This is a great way to accelerate the process and reduce risk by sharing this information with other parties before the deal is complete.

Traditionally companies have used email to share SOC 2 docs and other documentation. Although this is a good idea, it’s inefficient and can lead to problems with version control. It’s also unsecure, as email-related attacks are increasing, resulting in compromised inboxes, stolen credentials, and hacking exploits.

Many secure storage and file sharing services, such as Box and Dropbox, offer document accessibility from any device and in any location. While they provide a high level of security most users or businesses need more than this. Documents that are sensitive and are used to raise funds, due diligence or negotiating agreements must be stored in software that has greater levels of security.

The most important question to inquire about a “secure data room” is whether it restricts authorized users from sharing data with non-authorized users. Unfortunately, the answer is almost always not. Most secure data rooms do not restrict the number of times the same user’s credentials can be used to access the system. It’s easy for users to reuse logins from their personal devices or copy and paste the URL into a browser on a friend’s computer.

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