What is a Data Classification Policy?

The concept of data classification has been around for several decades, and there are various classifications used in different sectors. Data classification is a process of collecting, storing, and handling data in order to minimize the risks associated with data breaches. Data classifications can be used as a security measure both internally and externally. Internally, companies employ different classification levels for information that needs more excellent protection, such as credit card numbers or personal identification details. Externally, governments provide varying degrees of security based on the sensitivity of the information, like classified government documents or social insurance numbers.

A data classification policy is a strategy for classifying a business’s stored information based on the level of its sensitivity, ensuring competent handling, and lowering corporate risks. A data classification policy establishes a framework of rules, processes, and procedures for each information class in order to keep it safe. This policy allows companies to identify and protect sensitive and confidential information. It also helps identify policies that are in place for protecting such data at rest and in transit. The process of classification can also help build a culture that encourages good behavior around data protection.

What are the benefits?

A data classification policy can help companies by:

  • Allowing for a standardized approach to protecting sensitive information.
  • Enabling the use of encryption and other security controls based on data sensitivity levels.
  • Providing an organized structure for identifying, classifying, storing, and securing sensitive information.
  • Reducing the risk of improper employee behavior.
  • Helping ensure the confidentiality, integrity, and availability of sensitive information.

What are the drawbacks?

  • The biggest problem with a data classification policy is that it can be challenging to enforce. Not every employee may understand what different levels mean or how they affect when and where data is accessed. Furthermore, some organizations do not fully understand which data classes are applicable to their data.
  • Data classification policies can also be expensive if they are not correctly implemented. It requires a lot of time and effort for the initial evaluation process, which is done by trained staff using specialized tools and techniques to map each sensitive piece of information. It also requires extensive training and awareness on how these policies affect employees’ work.

Classes of Data

Data Classification Policies are sets of standard guidelines that companies use to determine which types of information should be treated as Confidential, Sensitive, or Personal data. The most common types of data classifications that businesses use today include Public, Confidential, Sensitive, and Personal data.

Public information is any content that does not have privacy or confidentiality concerns. Public information does not contain any confidential or sensitive data. No laws prevent users from accessing public data or restricting companies from collecting, storing, and using it. Any information that is not classified as Public can be considered Confidential, Sensitive, or Personal.  

Confidential information is any content that is very private, sensitive, or secretive. That can include data that is financially valuable to users or the company itself. Companies must protect confidential data with heightened security measures due to the high risk to users or the company. Confidential information is any data that requires protection or privacy – such as email addresses, bank account numbers, and social security numbers. 

Sensitive Data is information about a person that may cause physical, mental, or legal harm if released without authorization. Sensitive information includes credit card numbers, government ID numbers, and medical records. Sensitive information includes content that is similar or related to confidential data but not as secure. That can include anything from health records and financial statements to student records and test scores. A data classification policy should protect sensitive information by increasing security measures to protect sensitive data such as credit card numbers and passwords. Sensitive information refers to content that could cause harm if publicly available – including protected health information (PHI) or personally identifiable information (PII).

Personal information is any information about an individual that can be used alone or with other information to identify, contact, or locate a single person. Personal information includes names, addresses, phone numbers, and email addresses. Data classification policies should ensure personal data is protected with the highest security measures since it presents a higher risk for identity theft and financial loss.

What Makes an Effective Data Classification Policy?

A classification policy comprises two basic components: the process for classifying information based on sensitivity levels and the security controls in place to help protect classified information.

An effective data classification policy involves a comprehensive and robust approach to protecting personal information. It also means that the company holds itself accountable for ongoing compliance with both privacy legislation and the requirements of other jurisdictions where it operates. It could mean that some data is automatically encrypted without any user intervention; it’s automatic and enforced at a system level, not just on an individual basis. 

We recommend that organizations consider using both a static and dynamic data classification approach. Static data classifications are based on the type of information itself, such as what types of consumer or business information are being collected. In contrast, dynamic classifications are determined by factors that change over time, such as the importance of data at a certain point in time. It makes for a more comprehensive and complete data classification strategy that considers the type of information being stored and its importance to both the organization and its stakeholders.

Data classification policies are most useful in organizations where sensitive data is frequently accessed, especially those that handle financial information, intellectual property, or customer records. They also benefit any organization which holds personal data. Data classification policies work best when businesses adopt them as part of their risk management practices.

Points to Consider Before Writing a Data Classification Policy

Consider the following factors when creating a data classification policy:

  • The sensitivity levels of different types of information need to be identified so they can be classified correctly. That includes both static and dynamic classifications.
  • Ensure you have adequate controls for protecting each level of information in place. These controls should depend on the sensitivity level of the data in question and could include encryption, user authentication, access controls, or segmentation of networked systems.
  • Roles and responsibilities need to be clearly defined, so everyone involved understands their role in protecting personal information. That includes training employees on why data classification policies are in place and how they should follow them.
  • Tracking, auditing, and reviewing data classifications should be included as part of an organization’s continuous monitoring activities. That will help to ensure that the proper controls are in place to keep information secure and assess where vulnerabilities may exist.

Nowadays, organizations need to take data protection seriously, and creating a Data Classification Policy is one way of doing this. Still, it should be coordinated with a robust approach that includes static and dynamic classifications, user authentication, access controls, encryption, employee awareness training, and risk assessments that include tracking audit reviews to ensure compliance. If you’re looking for help creating a data classification strategy or any other cybersecurity and compliance solutions tailored to your needs, please feel free to contact us today!

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