A data room is an electronic storage system that allows documents to be stored in a secure environment. It also comes with a range of additional features that assist in the due diligence process. These include annotation tools that allow for granular permissions, activity tracking and watermarking.
Data rooms are frequently used to share security documents with clients (SOC 2 documents or compliance certifications) in order to facilitate due diligence. Sharing the information with other parties prior to the deal closes is a great method to speed up the due diligence process and decrease the risk.
Traditionally, companies have utilized email to share SOC 2 documents as well as other documentation. This is not just inefficient, but also leads to problems with version control. It is also insecure due to the rise in attacks on email that result in compromised mailboxes, stolen credentials, and phishing attacks.
Many secure file-sharing and storage solutions like Box or Dropbox offer document availability on any device and at any location. They offer a high degree of security, however the majority businesses and individuals need more. Documents that are sensitive and are used to raise funds or due diligence deals need to be stored in software with higher levels of protection.
The most important thing to inquire about a “secure data room” is whether it blocks authorized users from sharing files with unauthorized people. Unfortunately, the answer is usually “no”. Most secure data rooms do not limit the number of times the same click here to investigate user’s credentials can be used to access the system. People can easily re-use logins on their devices or copy and paste links into the browser of a friend’s PC.