The security of confidential information during financial and business transactions is crucial. Virtual data rooms are used to share and store private documentation in a secure setting with restricted access for users. Generally, they are used for due diligence purposes during M&A deals however, they can be used for other purposes too.
The best VDRs have a variety of features to ensure that documents are safe to be stored and shared throughout a deal a process. For instance, they could include two-factor authentication that requires not just an account password, but also factual information or codes that are unique to each user. This reduces the risks of data breaches caused by compromised passwords. Many VDRs also offer granular permissions that allow access to specific files. IP restriction is another feature that limits access to virtual data rooms to specific IP addresses. This stops sensitive data from being downloaded onto unauthorised devices, and also helps keep information from being leaked.
Other features offered on some VDRs include watermarking, which provides an irremovable identifier on each document, as well as audit logs, which track the actions of documents within the data room. They are used to determine who has been able to access or modify files, and can also aid in the investigation of data security breaches. Secure spreadsheet viewing is another useful feature. It ensures that Excel files are only accessible by a limited number of users.
When you select a data space make sure you verify its certifications and standards to verify that it offers the right level of security for your documents. Ideally, it will be PCI DSS Level 1, ISO 9001 / ISO 27001, FIPS 140-2 and MTCS Level 3. Some investment banks have an approved vendor list that lists data rooms that they are comfortable working with. Choose a vendor who has these credentials and also has a solid reputation in the industry.