Tuesday, May 28, 2024

Data Room Security Features: What You Need to Look Out For


Virtual data rooms enable businesses to securely share sensitive documents with other parties involved in complex business transactions like M&As (mergers and acquisitions), due diligence processes, initial public offerings (IPOs), and fundraising.

Virtual data room providers promise that their data room services are secure enough to protect your company’s sensitive information.

But how can you guarantee the security of a particular data room solution? What data room security features do you need to look out for? Let’s discuss this in detail.

What makes a virtual data room secure?

Here are some of the key security features that every data room should incorporate.

Document permission controls

Secure virtual data rooms enable you to set strict access permissions for all documents and folders on a granular level to maintain data confidentiality. This means that you should be able to control which documents can be accessed, viewed, downloaded, or edited by whom.

Your data room solution should also let you revoke access to or remotely destroy documents even after a user downloads them. Some data rooms also let you make only specific parts of a document viewable for different individuals.


Encryption ensures that data is coded when it’s stored on cloud platforms. The best data rooms utilize 256-bit encryption to protect data moving to and from the server, as well as the files being transmitted.

Only users that have private encryption keys can access the protected documents.

Dynamic watermarking

Dynamic watermarking ensures the ownership rights of documents shared within the virtual data room. It enables users to use visible or invisible watermarking to protect documents.

Digital watermarking also makes it possible for you to track which users are downloading or printing the documents. The best data room providers should make it possible to add watermarks to files in different formats, including video, audio, and text.

Single Sign On (SSO)

SSO integration allows using the same login credentials to access various applications without requiring additional credentials. This authentication service ensures security without forcing users to go through multiple login pages for each separate app.

Audit trails

Audit trails or logs provide an overview of user activity in the data room. For example, you should be able to see who logged into the data room or accessed particular files or workspaces.

Some data rooms also provide information about the user, like IP address, location, and device to prevent data leaks and VDR exploitation.

Multi-factor authentication

Multi-factor authentication requires one or more extra steps for the user to be able to access the data room other than just a password, like OTPs (One-Time Passwords) sent to the user’s email or mobile phone number. This provides a higher level of security and protection for the data room.

Find more data room security feature descriptions and comparisons at datarooms-review.com. The website reviews some of the best data rooms on the market by security, convenience, pricing, and many other essential factors.

Security and compliance certifications: The ones that really matter

Many virtual data room providers claim that they hold a number of security and compliance certifications that validate the protection capabilities of their solutions.

However, not all certifications hold the same value. Some certifications are essential, while others don’t really matter much.

Here’s a quick overview of the security and compliance certifications that every electronic data room provider must have:

  • The Financial Industry Regulatory Authority (FINRA) Compliance. The FINRA compliance provides investors with assurance that the provider meets the security industry’s fair operation standards. The FINRA is widely regarded as the most prominent independent regulator for securities organizations.

  • ISO 27081 Compliance. This is globally recognized as the most important security certification for cloud storage systems. ISO compliance validates the provider’s ability to meet the requirements of protecting Personally Identifiable Information (PII).

  • Service Organization Controls (SOC2). The SOC2 certification assures secure financial document storage and sharing.

Can you share sensitive information using virtual data rooms?

It’s generally considered safe to share critical company data with virtual data rooms.

Some data room vendors may have additional security features, making them more secure relative to other providers. However, regardless of the provider you choose, using online data room software is always much safer than sharing documents using a public cloud storage provider like Google Drive.


Alright, so that was a quick overview of the essential security features and compliance certifications that the best virtual data room providers should have.

Keep these features in mind when you compare virtual data rooms, and rest assured your company’s confidential materials remain safe.

Read more

More News