Security of confidential information is essential during business processes and transactions. Virtual data rooms are typically used to share and store private documentation in a secure location with controlled access for users. Typically, they are utilized to conduct due diligence in M&A deals however, they can also be used for other purposes too.

The top VDRs provide a variety of options to ensure that documents are safely stored and shared during a deal or process. For example, they can include two-factor authentication which requires not just the use of a password, but also factual information or codes that are unique to each user. This helps reduce the risk of data breaches as a result of compromised passwords. Many VDRs offer granular permissions that restrict access to particular files. IP restriction is another feature that restricts access to virtual data rooms to certain IP addresses. This prevents sensitive information from being downloaded onto unauthorized devices, and helps to keep information from being leaked.

Other features that are available on some VDRs include watermarking, which displays an immovable identifier for each document, and audit logs that track the actions of documents within the data room. These are useful to identify who has accessed and modified what files and aid in the investigation of data security breaches. Secure spreadsheet viewing is a useful feature. It assures that Excel files are only accessible by a limited number of users.

Check the certifications and standards of the data room to ensure that it provides the right security level for your documents. It should be PCI DSS Level 1, ISO 9001 / ISO 27001, FIPS 140-2 and MTCS Level 3. Some investment banks keep an approved list of vendors that include data rooms that they are comfortable working. It is important to choose an organization that has these credentials and has a good reputation within the industry.

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