What is a Data Room?

A data room is a storage option for electronic files that allows documents to be stored in a safe environment. It also comes with a number of additional features that help with the due diligence process. These features include annotation tools and granular permissions, as well as watermarking and activity tracking.

The most common use of a data room is to share security documents (SOC 2 documents and compliance certificates, etc.) with clients in order to facilitate the due diligence process. This is a great way to accelerate the process and decrease risk by sharing this information with other parties before the deal is complete.

Traditionally, companies have used email to share SOC 2 docs as well as other documentation. This isn’t only inefficient, it also causes problems with the control of version. It’s also vulnerable as email-related attacks are increasing, which can lead to compromised mailboxes, stolen credentials and the phishing exploits.

Many secure file sharing and storage solutions, such as Box and Dropbox provide access to documents on any device and any location. They offer a high level of security, however the majority businesses and individuals need more. Sensitive documents used to conduct due diligence, fundraising or negotiations should be saved and shared through software that offers more security levels over these personal file sharing systems.

The most important question to ask in any secure data room’ is will it prevent authorized users from sharing documents with non-authorized users? Unfortunately, the answer is generally “no”. Most secure data rooms don’t even limit how many times the same user credentials can be used to access the system. Users are able to reuse logins on their devices, or copy and paste a link into the browser of a click here to investigate computer friend’s.

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