What Is Data Classification and How Can it Help Your Business?

Imagine that your office is a mess, and your desk is flooding with papers. Creating an organized filing system would make your life much easier. However, filing all these papers is a lot of work. A business’s electronic data can be thought of in the same way.

Every business has data. No matter the size or industry of an organization, each one has critical data they must protect. Data can be anything from sales data to customer intellectual property, a customer’s credit card information or a patient’s private health information.

How can businesses organize their data and ensure it doesn’t get into the wrong hands? Answer: data classification. In this four-part series, we’ll be talking about BDO Digital’s suggested path to security maturity by covering data classification, incident management, data loss prevention (DLP), and advanced e-Discovery (AeD).

What is Data Classification?

Data classification is the process of searching for and identifying all the data across your organization to determine what information your business has and where that information lives. By discovering your data, you can maintain data inventory, keep it organized by labeling it leading to security of your data.

When scanning your environment, you’re looking for sensitive information. Where this data lives in your environment, whether it be on-premises or in the cloud, in a database or on a SharePoint site, is extremely important to understand.

Why is Data Classification Important?

Organizations want to control their data, but businesses are unable to operate without data being shared which is why data classification is so important. By performing an inventory of your data, labeling it, and placing enforcements around it, you can keep it more secure. Plus, classification makes other security and compliance tasks much easier.

Data classification allows you to:

1) Keep Data Organized for Regulatory Purposes

Since data regulations and laws require many organizations to maintain a data inventory or maps of where their sensitive data lives, data classification is becoming an essential exercise that organizations need to undertake. Sure, organizations can manually gather data when it’s needed, but it wouldn’t be as efficient. Data classification is the key to good data hygiene and can help businesses meet regulatory and other legal compliance requirements as needed.

2) Organize and Label Data

Just like you organize and label papers in your office, organizing and labeling your data is a way to keep things in order. It makes it easier for you to find things. But, other than tidiness and the organization of data, why else would you map and classify your data? Here are a few reasons why:

Efficient data retrieval— Classifying data allows for efficient data retrieval. If GDPR (General Data Protection Regulation) requires you to make data available to customers who want to know how you are handling and processing their information, for example. Or, in the event of a data breach, organizations need to quickly track down what data was at risk of being compromised and where that data lives. Organizing and labeling data can help organizations retrieve data and identify issues more quickly and efficiently.

Set enforcements around data—Labeling your data isn’t just an organizational tactic, it also closes any existing security gaps. Data classification helps you clearly see where your sensitive data resides. From there, you can control who sees what data, what actions are taken on the data, and where it travels both internally and externally.

3) Keep Data Secure

Labeling data allows you to set enforcements around different types of data where you can set up rules and regulations to keep data more secure. Sensitive data can have stricter rules around it, whereas other types of data may not have as many controls on it. Once you classify and label data, you can also set data loss prevention measures in place.

Data loss prevention allows for policies to be set around your data dictating how it can be shared and what can be done with it. For example, you may want to block personally identifiable information (PII) in a healthcare organization from being shared via email. If this information is detected, then the email would be blocked before it can be sent. Classifying and labeling data enables you to set specific rules and policies around the data you want to protect.

Impact of Microsoft 365 E Compliance

Forrester’s Total Economic Impact™, a study commissioned by Microsoft in June of 2021, is an analysis of various organizations across different industries, all of whom use Microsoft 365 E5 Compliance. The study reveals that these organizations improved their ability to meet regulatory requirements and reduced risk of sensitive data loss or mishandling by providing better visibility and control through a single platform.

Getting Started—How to Build a Data Map and Classify Your Organization’s Data

After reviewing the benefits of data classification, it’s time to map your organization’s data. A huge part of successful data classification is the use of the right tools. Azure Purview and Azure Information Protection are two tools your organization can use to for data discovery. Purview has data mapping capabilities, so once it uncovers data sources, it puts them into a map. Azure Information Protection can also enhance your data protection.

In addition to the right tools, having a plan in place can also ensure successful data classification. Here’s how you can get started:

Step 1: Outline Objectives. Before you start the data classification process, make sure you have a clear understanding of what you’re trying to achieve. Once you uncover all data within your organization, what is your plan? Knowing how the data will be used and having a plan to organize it (classify and label) is extremely important.

Step 2: Categorize Data Types. Once the right set of tools are used to discover data across the entire organization, determine the types of data your organization owns and collects. Analyze the various risk levels. Make sure you understand where protection is needed most.

Step 3: Classify Data. After you analyze data types and the sensitivity of your data, it’s time to start classifying it. Determine which category each piece of data fits into. Simplify the process by classifying data as public, private, and restricted. From there, you can look at data on a more granular level.

Step 4: Set Protective Measures in Place. By discovering sensitive data and where it lives in your environment, you can identify where protective measures are needed. Establish policies for each label so that DLP can prevent unwanted sharing and exfiltration of sensitive data.

Step 5: Monitor and Maintain. After classifying your data, put a continuous workflow in place for new data that comes into play. The data classification process should be evaluated on a regular basis to ensure it’s up to date with the current regulatory requirements and your business needs.

Clearly, identification and classification of your data is extremely important. Knowing what data your organization collects and how it is used leads to improved efficiency and accountability within the organization. It also leads to better reporting and decision making and helps to optimize operational performance. Once enacted, data classification and mapping become the single source of truth for data in the organization.

If you have questions about data classification or need help executing it within your organization, our security specialists at BDO Digital can help. Contact us today to get started.

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