All businesses manage copious amounts of data. Every day, new documents are created, older files are updated, and collaborative work is shared between employees.
Business data typically contains sensitive and private information that unauthorized users should never have access to. This is particularly important if you work in a regulated field. But even if you’re not, you have to understand which data is most critical and how to prioritize it through data classification to keep it safe.
Data classification defines and organizes data in a way that accounts for how important it is against predefined criteria, such as the file type, sensitivity, or the value the data has to the company.
Improving business security and safeguarding information like financial records, customer health records, or personally identifiable information (PII) requires a reliable data classification process. This involves tagging and categorizing documentation to make it easier to track and search, while eliminating the need to keep copies of important files in multiple locations.
By organizing your business data according to the predetermined framework laid out in your data classification policy, you can sort this information accordingly, find what you need more easily, and invest more security resources into the most critical information. Most businesses find using data-centric security software the most efficient way to do this, as these tools help companies protect the data itself, rather than focusing on servers or other devices where data is stored.
Data classification can be arranged into two types of levels based on the type of data your business has and the size of your organization. The first method uses a simple system that organizes data by sensitivity.
Also referred to as confidential or restricted, this is the most critical data an organization has. Business operations would experience severe setbacks if this data were lost or compromised. Financial records, business intelligence documentation, or health records all qualify as high sensitivity.
This information can be classified as internal use only or sensitive. Data at the medium level is information that stays within an organization, but it can be shared with the majority of the team. Emails, general business information, and documents that don’t contain sensitive or private information fall into this category.
Otherwise known as public or unrestricted data, this category includes information that can be shared with the public; it’s considered low sensitivity. This could include press releases, website content, or marketing materials.
For businesses that hold a large range of data, it helps to break the levels into more defined categories.
Once data has been tagged according to its sensitivity level, it can be filed based on its type. This typically has three categories.
Ddat classification is essential for businesses in fields that work with high-level compliance and regulatory standards, like the General Data Protection Regulation (GDPR) or Health Insurance Portability and Accountability Act (HIPAA).
Regulatory compliance in the finance and insurance industries is critical for dealing with large amounts of PII. Data classification in these fields focuses on maintaining information in a secure way to mitigate cyberthreats, and at the same time ensuring compliance with GDPR and payment card industry data security standard (PCI DSS) regulations.
The government holds information about private citizens and protects sensitive information that’s critical to national security and public safety. This data represents some of the most sensitive information in the world and requires the highest level of security. The agency must also comply with regulations like the Freedom of Information Act (FOIA) both on a national, state, and local level.
PII and protected health information (PHI) of patients is extremely sensitive information that falls under HIPAA regulations. Data classification ensures compliance and lowers the risk of this information being leaked in a data breach.
ransomware attacks were reported by healthcare organizations in the US in 2023.
Source: Federal Bureau of Investigation
Not all healthcare information is the highest level of sensitivity, though. Data like drug information or completed medical studies may be released to the public.
Student records, academic performance data, and other information relating to faculty and staff are all held in databases at educational institutions. Beyond this, certain campus offices may keep other sensitive information , such as tax details for students and their families. Not all information needs to be shared with every department, so data classification protects these files from unauthorized users.
Both online and brick-and-mortar stores have a large amount of customer information, such as sales transaction data and payment details, along with operations-critical files like inventory information. It can be used for targeted marketing efforts and customer experience improvement, but must be protected to comply with privacy and payment security regulations.
Organizations that don’t actively classify their data put themselves at greater risk of cyberthreats and compliance-based fines. That’s why incorporating a data classification process into your business is essential, no matter how much and what type of data your company keeps.
Data classification gives you an added layer of security. It helps your organization prioritize data based on its sensitivity, which means you can focus your resources and budget to protect the most critical assets. It saves you money and it also helps you avoid costly fines should your business suffer a data breach.
Data classification also helps your IT team with identity and access management because knowing the data classification level of documents allows them to assign access according to role. This also goes a long way in preventing internal information theft.
It’s not only regulators and internal employees who are concerned about your business data security, though. A strong data classification policy that fits into your wider security strategy is one of the best ways to build and retain trust with your customers. When they hand over their payment or personal details to your company, they want to know that it’s safe from exploitation by cybercriminals.
of surveyed users would not trust a company that had experienced a data breach that exposed their personal data.
Source: Statista
Not every regulatory standard applies to your business, but it’s likely that you have to comply with something. If you sell to European customers, you need to be GDPR compliant. If you take digital payments in any form, you need to comply with PCI DSS. Using data classification, you can identify which information helps you remain compliant and avoid significant penalties.
Data classification, in conjunction with other data security tools you might be using, can help you keep a paper trail of how information has been used in your business, who has access to those files, and when updates were last made. This is essential if you ever face a compliance audit and need to prove that data is being properly secured.
Classifying data expedites and simplifies analysis and reporting for internal employees. You can easily find the most relevant data without having to root through extraneous information.
This approach to data security also enhances record retention and assessment. archived files can be moved to lower priority storage servers or networks to conserve valuable space on the most used and secure devices.
Keeping company data well-organized and secure should be a top priority for any organization, no matter how big or small. With data classification, you can boost your business’s security and create a more efficient data organization system that benefits your whole team.
Looking for more ways to protect your data? With sensitive data discovery software, your employees can locate your most sensitive business information across multiple company systems, databases, and applications.