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A secure data room (also called a virtual data room) is a software solution to manage the sharing of sensitive information with authorized individuals. It provides a structured safe and secure method for companies to share documents with multiple parties – with document tracking as well as version control, among other advanced features. Traditionally companies have resorted to spreadsheets and emails to share their due diligence documents but these are not secure and can lead to a myriad of liabilities if the wrong individuals are granted access.

“Secure data rooms” tend to advertise the level of security their server system is by claiming that they use encryption on the hosting server. This is great, however it does not stop hackers from boardroom security gaining access to the server. Most browsers have tools that allow them to capture high-quality images from document pages. Secure data rooms can’t stop this.

Secure data rooms claim that their system prevents sharing by requiring users to sign in with 2FA. However, this is merely an additional layer of security that does not deal with the fact that authorized users are still able to copy and paste link information to other users – or forward their own emails using links. Secure file sharing solutions with DRM are the best option for businesses. They lock the files to a specific device and locations, so they aren’t shared or transferred.

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