What is a Data Room?
A data room is a virtual storage solution that gives you a secure place to store documents. It also provides a range of features that aid in due diligence. These include annotation tools, granular permissions, watermarking and activity tracking.
Data rooms are commonly used to share security documents with clients (SOC 2 documents or compliance certifications) to help with due diligence. This is a great way to accelerate the process and reduce risk by sharing the information with third parties before the transaction is completed.
Traditionally, companies have utilized email to share SOC 2 docs and other documents. This isn’t just inefficient, but also creates problems with revision control. This is also unsecure, due to the rise in attacks on email, which can result in compromised mailboxes, stolen credentials, and phishing attacks.
Many secure file-sharing and storage options such as Box or Dropbox allow access to documents on any device and at any location. While they provide a high level of security, many businesses or individuals require more than this. Important documents used to conduct due diligence negotiation, fundraising or even negotiating deals should be stored and shared through software that offers more security board management tools levels than these personal file-sharing platforms.
The most important question to ask in any secure data room’ is, does it restrict authorized users from sharing documents with non-authorized users? Unfortunately, the answer is usually not. The majority of secure data rooms do not restrict the number of times that the same user credentials may be used to log into the system. It is simple for users to reuse logins from their own devices or copy and paste the link into the browser of a friend’s computer.