Security and Compliance in the Virtual Data Room

Every year millions of customers face the consequences of data thefts while companies pay hefty fines. The year 2022 is no different — statistics say that every second, two internet users have lost their data so far in 2022. 

This sounds strange because companies, organizations, enterprises, and even people use protective measures against cyber crimes.

The technology is available, but many businesses either don’t know how to use it or believe it is expensive. However, data management solutions like virtual data rooms oppose the above narrative. Data room software is cost-effective, and its security is second to none.

Virtual data rooms are not new to the business world. Electronic data room software has been a regular part of M&As for almost two decades. The question stands, why is a data room safe?

Here is a brief introduction to the data room software and a detailed discussion of its security.

What is a virtual data room?

Men with laptops


A virtual or online data room is a digital document repository where corporations, businesses, governments, and professionals can store, share, organize, and manage their data. Data rooms are not just document storage platforms but multi-purpose business solutions.

Any good quality virtual data room provides you with communication and collaboration tools. Businesses use data room services for online meetings, webinars, and conferences. Data rooms are also a safe and commonly used platform for board communications. Their Q&A modules are very handy in dealmaking.

Due to their wide range of data management and communication features, virtual data rooms are a safe house for deal or project management. You can easily see data rooms facilitating fundraisings, mergers, acquisitions, project biddings, corporate consolidations, joint ventures, and real estate trades. You can read more about VDRs in dealmaking, their features, benefits, and pricing options at

Virtual data rooms security

How secure are virtual data rooms? Online data room vendors regularly and strictly comply with local and international cyber security standards. 

ISO is the biggest developer of international standards, and its cyber security regulations are accepted in every part of the world.

Regarding security, ISO 27081 is a primary choice for cloud storage solutions. This is why most of the virtual data room vendors are ISO-certified.

Apart from that, the following are some top-notch security features that make virtual data rooms as safe as houses.

Strong data encryption methods

Data encryption methods in the VDRs are the strongest and latest worldwide. Premium-quality virtual data rooms have 256-bit (SSL) data encryption which banks and the military use. Data rooms not only encrypt the files but the data inside them.

Document restriction settings

In addition to regular document access settings, virtual data rooms are famous for view-only and fence-view modes. The fence view is particularly useful when sharing secretive data with external parties. It ensures that nobody can edit, print, save, download, share, scan, or overwrite the document. It also prevents users from taking screenshots and photos of the file.

Digital watermarks

Digital watermarks are like a stamp of ownership. Data room users can embed digital watermarks in their documents or files and can track any changes made in the document. These dynamic watermarks help resolve copyright disputes.

Two-factor authorization

It is a relatively common yet very effective security feature. Two-factor authorization is a great preventive measure that limits the entry of unauthorized users.

Any legitimate user has to complete the login process by entering the secret password and a one-time generated code shared on the user’s email address or mobile number. Therefore, even if the user’s password is compromised, the hacker will still not be able to log in.

Virtual data rooms and compliance


Just as mentioned above, data rooms are often ISO 27081 and 27001-compliant. It indicates that such VDRs are good for storing and managing private business data.

In addition to that, virtual data room providers also comply with geographical and local security standards. Companies using these VDRs won’t have to worry about compliance issues.

Here are some notable data room certifications:

  • ISO 27017 and 27018-compliance. These are updated versions of 27001. The first is a cloud security standard, while the latter gives specific guidelines on PII (Personally Identifiable Information).
  • FINRA. It regulates brokerage firms and exchange markets. Financial institutions operating in the USA must have FINRA-compliant data management systems.
  • SOC2. Voluntary compliance requires companies to follow certain data integrity, privacy, security, confidentiality, and availability practices.
  • GDPR. It is a regulation in EU law on the privacy and security of data.

Final words

Virtual data rooms are ISO-compliant, secure data repositories commonly used to store, share, and manage business documents. 

The most notable security features in VDRs include two-factor authorization, digital watermarks, 256-bit data encryption, fence view mode, customizable NDAs, and document access settings. Thanks to these features, data rooms prove to be one of the safest data storage and sharing business solutions.