Data Classification: Why is it Important? - A Business Blog Article from KLR

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Data Classification: Why is it Important?

posted Nov 28, 2018 by Daniel M. Andrea, CPA, CITP, CISA in the Business Blog

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Does your organization have a data classification program in place? If not, it should! A well- managed data classification program can help your business with its risk management, legal discovery and compliance. Read on.

What is data classification exactly?

Data classification is the process of organizing data by relevant categories so that it can be used and protected more efficiently. Some organizations also need to classify data to comply with regulatory requirements. Well managed data classification programs enable organizations to apply the appropriate level of security to all data, therefore lowering the company’s overall risk.

How is data classified?

The data classification process maps out a variety of components within your organization (factoring in every type of data belonging to the business) and then classifies it according to storage and permission rights.

Data can be classified by a number of categories:

  • Confidential- Data that if compromised, is likely to result in long term harm to the business or individuals handling it. Access to confidential data is restricted to those who have a legitimate purpose for accessing it.  Any data subject to legal compliance (such as HIPAA), by default, should be treated as confidential.
  • Sensitive- Data that if compromised, could cause minor or short term harm. The main difference between confidential data and sensitive data is the likelihood, duration and level of harm caused.
  • Public- Data readily available to the general public. This data has no legal restriction on access or usage.
  • Personal- Data belonging to a living individual who can be identified from that data (IP address, cookie identifier, etc.)

The above is just one example, your data classification structure should be constructed based upon your business needs and the environments you operate in.

Benefits of data classification

The data classification process…

  • Helps you establish a security program by indicating which data you should focus on in allocating resources for security and protection
  • Makes data easier to locate and retrieve
  • Helps reduce storage and backup costs
  • Speeds up the search process
  • Compliance with regulatory mandates

How does the data classification process work?

In the past, data classification was a user-driven process, but organizations today have the option to automate classification. Organizations can establish processes that allow users to classify documents they create, send, modify etc.

There isn’t a one size fits all approach to data classification, but there are some starting points that can help you develop your strategy.

  1. Define a data classification policy- This policy should be communicated to all employees and include the following basic elements- goals of the data classification efforts, how the classification process will be organized and who will be impacted, what categories the data will be classified into, who the data owners will be, and security standards that outline handling practices for each category of data.
  2. Identify sensitive data- You may want to prioritize data discovery. Data discovery involves identifying and locating sensitive or regulated data in order to properly protect it. The process involves auditing sensitive or regulated information including confidential and protected data so that you can make sure the appropriate controls are in place for security best practices and to meet regulatory compliance measures.
  3. Review your security policies and procedures- This will help assess whether all data is protected by risk-appropriate measures. You can then prioritize efforts, control costs and improve the overall data management processes.
  4. REPEAT! Data classification should be an ongoing process that you revisit often.

In today’s world, business is frequently conducted in the cloud, and file sharing and storage have become the “norm”. Data is located in several systems, applications, and shared files, making its protection, authentication, and confidentiality a challenge for businesses across the board. Consider investing your time in data classification…you don’t want to be caught in a situation where you are unable to locate and protect your sensitive data.

Questions? Contact us today.