The security of confidential information is vital during business processes and transactions. Virtual data rooms are typically used to share and archive private documents in a secure setting with access control for users. They are typically used to perform due diligence in M&A transactions, but they can also be used for other purposes.
The best VDRs have a range of features to ensure that documents are kept securely stored and shared during a transaction or process. They could, for instance include two-factor verification, which requires that not only the password is used, but also the actual information and codes specific to each individual user. This decreases the chance of data breaches as a result of compromised passwords. Many VDRs have granular permissions to restrict access to particular files. IP restriction is another feature that restricts access to virtual data rooms to certain IP addresses. This stops sensitive data from being downloaded onto unauthorised devices, and also helps stop leaks.
Certain VDRs also provide watermarking which is an irremovable identifiable identifier that is placed on every document. They also have audit logs which record all actions performed on files in the data room. These can be useful to determine who has accessed and modified which files, and may aid in the investigation of data breach. Other useful features include secure spreadsheet viewing, which ensures that content in Excel files can only be viewed by specified users.
When choosing a data storage facility make sure you check its certifications and standards to verify that it provides the appropriate level of security for your documents. It should be PCI DSS Level 1 ISO 9001 / ISO 27001 FIPS 140-2 MTCS Level 3 Some investment banks have an approved vendor list that lists data rooms they are happy to work with. It is important to choose a data room provider who has these credentials and has a solid reputation in the business.