In 2017, the number of data breach incidents in the U.S. hit a record high of 1,579 breaches (ITRC). This number indicates a nearly 44% increase over the record high figures reported for 2016. The best method of preventing a data breach is to ensure your data is adequately secure. Many businesses, however, make the mistake of sharing and storing sensitive data via email or other cloud services that do not guarantee encryption. It’s not surprising, then, that these unsecured spaces have become easy targets for hackers. It’s currently estimated that the average cost of a data breach in the U.S. is $3.62 million, a staggeringly high figure that should make any business wary of a cyber attack.
5 Often Overlooked Benefits of Using a Virtual Data Room
A virtual data room (VDR) is a secure cloud-based online platform used to secure store, share, and collaborate on content and information. Unlike other file-sharing and cloud storage platforms, they are built with inherit security features and functionality to safeguard data. Capital market firms use VDR solutions to conduct due diligence during M&A deals and other transactions, however virtual data room software is something that ever company needs in order to ensure they remain in control of sensitive and confidential information. We’ve outlined some of the ways these breaches could hinder your next deal-making opportunity, as well as key reasons a virtual data room is the of utmost importance when it comes to protecting your intellectual property and beyond.
The days of virus-wielding hackers are no more. Today, hackers have the ability to tap into and mine sensitive M&A information by targeting weak lines of communication like email and unsecured cloud storage.
Prompted by a 2017 report from FireEye, the SEC launched an investigation into several instances of hacking that targeted executives at publicly traded firms. The investigation lead to the discovery of a hacking crew called FIN4, a “Wall Street-literate” group that combines hacking expertise with business deals to hack into company emails, mine them for data and hijack email threads in order to seize credentials of investors and shareholders. FIN4 is considered responsible for targeting over 100 organizations.
Email, FTP and other unsecured cloud storage are no longer secure avenues for data sharing. A VDR solution is the best method of ensuring your information is kept secure and out of reach from pervasive hackers because they are built with multiple security layers like web application firewalls and intrusion detection systems to ensure corporate information is not leaked.
Minimize Human Error
A study by CompTIA claimed that 52% of breaches were caused by human error, while another study by IBM reported the number to be a astounding 95%. Given that the average cost of a data breach in the U.S. is $3.62 million, this is an un-ignorable issue that reaches far beyond simply training employees.
Deploying a virtual data room can be a cost effective way of curtailing inevitable human error. Account administrators can monitor and adjust who exactly has access to which files and the administrator always has control over the data. With the ability to set custom security profiles, conditions can be stripped, additional access can be granted in order to guarantee that human error doesn’t result in sensitive data leaks, and doesn’t occur in general. Providers like SmartRoom enable administrators to restrict view, print, save, and modification rights down to the document level.
Improve Deal Outcomes
Managing the relationships between those with access to the documents is also crucial to the success of M&A deals. Through detailed audit logs, a VDR will collect relative analytics on investors and prospective buyers. Maintaining an awareness of which documents are being looked at and for how long will allow a company to focus their efforts on serious buyers, anticipate potential enquiries and determine what information is of most value to serious investors. Failing to identify the most interested parties can lose you the deal.
Accelerate Deal Speed
Organization, editing and data checking are crucial elements of the M&A process. It’s no secret, however, that they will often stifle the momentum of a deal. Due diligence must be properly executed in order for an M&A deal to be successful and a virtual data room’s ability to streamline the processes will allow for this.
Good data room services will offer solutions that keep a deal moving forward at a productive pace. Platforms like SmartRoom offer features that allow for easy collaboration across the team. SmartRoom comes integrated with Microsoft Office 365 Online which gives users the ability to create and edit Word, PowerPoint, and Excel documents directly within the platform. As the document undergoes constant revision, the virtual data room will track each version and the user who made the modifications.
VDR providers like SmartRoom make unsecured email attachments a thing of of the past with secure document sharing links. SmartRoom’s SmartShare application allows users to easily share and collaborate on documents with seamless control through a simple secure link. Detailed reporting of shared documents provide key insights to administrators allowing them to manage deal activity more efficiently.
Multiple Use Cases Across Corporate Departments
Unfortunately, virtual data rooms are often underutilized. Many companies only turn to VDRs during M&A transactions, however their inherent security coupled with collaboration and reporting features extend their use case far beyond capital market uses such as M&A due diligence. Corporate law departments, law firms, and the real estate industry often get bogged down in digital paper, having to endlessly share, review, and mark up documents. Compliance, legal, and finance departments are constantly under the gun to stay up-to-date with compliance regulations and policies. As part of that ongoing pressure, these corporate departments have to report to and collaborate with consultants, service providers, CPA firms, and regulatory agencies. This creates a complex environment of multiple parties and sensitive content. Virtual data rooms can help companies effectively manage the corporate lifecycle by providing corporate departments the ability to securely share and collaborate on information, while at the same time, leaving a complete audit trail.