What is a Data Room?
A data room is an electronic storage solution that lets documents be kept in a secure environment. It also provides a range of features that assist with the due diligence. These include annotation tools that allow for granular access, activity tracking, and watermarking.
Data rooms are frequently used to provide security documents to clients (SOC 2 documents or compliance certificates) to help with due diligence. This is a great way to speed up the process and reduce risk by sharing this information with other parties before the deal is complete.
Email has been utilized by companies to share SOC 2 documents as well as other documentation. While this works, it is inefficient and leads to version control issues. It's also vulnerable as email-related attacks are increasing, leading to compromised mailboxes, stolen credentials and phishing exploits.
Many secure file sharing and storage solutions such as Box and Dropbox http://www.datazoning.net/vpnsecure-review-for-your-privacy-online provide access to documents from any device and in any location. They provide a high level of security, but most people and businesses need more. Documents that are sensitive and are used for fundraising due diligence, negotiating deals need to be stored in software that has higher levels of protection.
The most important question to ask any "secure data room' is: does it prohibit authorized users from sharing documents with non-authorized users? Unfortunately, the answer is usually no. Most'secure data rooms’ do not restrict the number of times the same user's credentials can be used to access the system. Users are able to reuse logins on their own devices, or copy and paste a link into the browser of a friend's computer.