The security of confidential information during financial transactions is of paramount importance. Virtual data rooms are usually used to share and store private documentation in a secure location with restricted access for users. Typically, they are utilized to conduct due diligence in M&A deals however, they can also be used for other reasons too.
The best VDRs come with a variety of features that ensure documents are stored securely and shared during the course of a deal or process. They could, for instance include two-factor verification which requires that not only the password is utilized, but also actual information and codes specific to each user. This reduces the risks of data breaches resulting from compromised passwords. Many VDRs offer 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 helps protect sensitive information from being downloaded onto unauthorized devices and also prevents leaks.
Other features available on some VDRs include watermarking, which is an unchangeable identifier to each document, as well as audit logs, which record every action on the data room’s files. These are useful to identify who has accessed and modified what files and can aid in the investigation of data breach. Other useful features include secure spreadsheet viewing, which guarantees that the contents of Excel files can only be viewed by specific users.
When you select a data space make sure you verify its certifications and standards to confirm that it offers the right level of security for your documents. Ideally, it should be PCI DSS Level 1 ISO 9001 or ISO 27001 FIPS 140-2 MTCS Level 3. Some investment banks have an approved vendor list that lists data rooms that they are comfortable working with. Look for a service that has these credentials, and has a good reputation in the industry.