If you are seeking funding for your business, an investor will go through a due diligence process to verify everything about your business. This includes your sales, bank statements, contracts, and much more.
Since this data is highly confidential, it is crucial to use virtual data rooms for due diligence. Yet, despite mass-scale improvements in cybersecurity, there are a large number of data breaches and leaks. According to Statista, Russia, China, and the United States recorded the most data breaches. Data breaches in these countries affected more than 150 million records in total.
One of the biggest reasons behind these data breaches is the use of ordinary data security mechanisms. Businesses can minimize these threats by employing secure data management solutions, such as virtual data rooms that strongly comply with regulatory bodies.
Here is how you can navigate regulatory and compliance challenges with online data room software and what to consider when implementing data room services. Let’s start with a brief introduction to virtual data room technology.
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What Is Online Data Room Software?
Online or electronic data room software is a certified online document storage solution used for safe data storage, sharing, and distribution by commercial businesses, nonprofits, organizations, unions, etc.
In addition to a full range of data management tools, virtual data rooms provide the latest project management and online communication tools. That is why dealmakers employ VDR technology for complex transactions like IPOs, fundraising, mergers and acquisitions, and joint ventures.
How Can Online Data Room Software Help In Regulatory Compliance?
Virtual data room providers nowadays are serving a majority of business sectors. Every industry is governed by regional or international regulatory bodies, and it is important for businesses and data room vendors to follow the protocols set by those institutions. Therefore, when you make a virtual data room price comparison and assess vendors based on ease of use and customizability, make sure you don’t forget the compliance matters.
Here are some examples of how virtual data rooms help you navigate compliance challenges.
FINRA, also known as Financial Industry Regulatory Authority, is a government body that regulates different financial businesses such as brokerage firms, securities firms, and other similar organizations in the United States.
FINRA is responsible for developing safe and ethical practices for conducting business. It requires businesses operating under FINRA to follow certain protocols when developing or buying data management solutions.
Implementing a FINRA-certified virtual data room ensures that you have successfully nullified the chances of compliance or regulatory risks.
SOC 2 Compliance
SOC 2 is not mandatory compliance for businesses, but it adds value to a business’s image in the eyes of the public, investors, and shareholders. SOC 2 defines best practices related to data privacy, information processing integrity, and data security and confidentiality.
A large number of virtual data room providers serving in the United States are SOC 2 compliant. Hiring one of those will indeed strengthen your cybersecurity game.
FISMA, or Federal Information Security Management Act, is a set of regulations related to data management and security practices. Every federal agency in the US must follow these protocols when establishing data management and security practices. FISMA-compliant virtual data rooms are a ready-to-use option for these federal agencies.
The Health Insurance Portability and Accountability Act, commonly known as HIPAA, is a federal legislation developed to govern the management and security of confidential customer information within the healthcare sector in the United States. It applies to various healthcare entities, including hospitals, pharmaceutical companies, and medical professionals, requiring them to protect patient or customer data diligently.
iDeals is one of the best data room providers for the healthcare and life sciences industry. It is not only HIPAA-certified but also possesses the strongest, eight-layered digital security system. That is why it is a preferred choice of medical practitioners, hospitals, and public healthcare institutes in the US.
The GRPR, also known as the General Data Protection Regulation, plays a key role in governing data privacy and usage regulations in the European Union Economic Area and countries falling in the European Union.
Companies operating under GDPR can hire data room services certified by the authority to make sure they follow all the data management practices set by GDPR.
ISO, or International Organization for Standardization, is one of the biggest and globally recognized bodies that set high benchmarks for different business practices. The organization defines data security protocols for different types of businesses and organizations, falling under the ISO-27000 family.
Most of the data room vendors are ISO-27001 and ISO-27081-certified, as these standards address cloud data storage practices.
Important Elements To Consider When Implementing Virtual Data Room Services
When choosing a virtual data room vendor, consider the following aspects to make an informed decision:
- Does the vendor comply with the standards set by your governing body, such as FINRA, FISMA, or HIPAA?
- What pricing method do they offer? Is the pricing fair and transparent?
- Is the service provider experienced enough to tackle industry-related challenges?
- How good is the customer care service?
Virtual data rooms are not only safe as houses, but they make sure you don’t have to worry about regulatory or compliance issues.
Modern virtual data room providers help businesses tackle security issues and comply with legal requirements of such regulations as FINRA, GDPR, SOC, HIPAA, and FISMA.
Some of the best virtual data room providers that ensure compliance with regulatory requirements include Ansarada, iDeals, Merrill, Caplinked, and SecureDocs.