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A virtual data room (VDR) is a digital repository that facilitates collaboration and the sharing of sensitive data in an encrypted and secure environment. VDRs are commonly used by companies to safeguard confidential data from cyberattacks and unauthorized viewing or downloading, particularly in major business transactions like M&A deals.

For companies that want to safeguard their intellectual property as well as confidential data, the advantages of utilizing an encrypted VDR outweigh the risks associated with traditional file-sharing methods like cloud storage or email. Data leaks can cost a company time as well as money and damage its reputation — and the most effective method to avoid a disaster is to put in place a strong set of security measures.

The typical features of VDR security include multi-factor authentication to confirm user identities, granular permissions to control access to documents/digital files and audit logs to monitor the file’s activity. Regular backups of data also guarantee that the information stored in a VDR is able to be recovered when the system fails or is subject to cyber attacks.

If a company is searching for a VDR that they can use, they should pick one that employs the most advanced encryption technology to scramble sensitive information during transmission and is a reliable backup in case an unauthorized user gains unauthorized access to the document or file. Advanced security measures like MFA and login monitoring to check the IP address device, the location of the user can be used to prevent data breaches and other forms of security violations.

Companies that are regulated by regulatory agencies like the FCA should also make sure that the policies regarding data handling of their VDR provider are in line with the regulations. This will ensure that any issues or complaints are dealt with swiftly and efficiently which reduces the chance of legal issues and damage to a company’s reputation.