How does VDR protect confidential data

By May 5, 2021Blog

Secure software provider

This article will review VDR service providers and present a general analysis of the main feature of such a service – the protection of confidential data.

The purpose of using VDR provider

Data leakage is a problem that more and more companies around the world face every year. The use of VDR has already proven its attractiveness in the implementation of the widest range of business processes, among which due diligence in mergers and acquisitions (M&A) is especially relevant.

Today it is one of the most popular formats for using VDR because large volumes of confidential information are exchanged in the M&A process. Participants need assurances that their assets and intellectual property are well protected. VDRs have a wealth of tools that greatly simplify the merger process.

VDR – a good alternative for storing confidential data

A Virtual Data Room is a collection of cloud infrastructure resources specifically designed for corporate business needs. Basic resources include CPU, random access memory (RAM), disk space, and a computer network with sufficient bandwidth. It is a virtual implementation of a physical data center equipped with servers and network components, each of which resides in a virtual space created in one or more physical data rooms.

Unlike FTP, which is used to transmit information in an unprotected form, VDR exchanges data using the E2E encryption principle using secure transport protocols SSL or TLS, which ensures maximum security of data exchange between the server and the agent, protecting them from MITM attacks.

All information is stored outside the company, namely in a certified data room. Additional protection of customer data is provided by the ability to back up the infrastructure and create a backup data center. Cloud data center allows you to instantly increase or decrease resources, which is very important for companies that are constantly evolving.

So, how can a virtual data room be used? In almost any situation when a company needs to provide simultaneous access to confidential information to several persons:

  • analysis of corporate reporting;
  • creating an archive of documents
  • audit;
  • preparation of an initial public offering (IPO);
  • mergers and acquisitions;
  • Search and provision of information for investors;
  • bankruptcy and restructuring;
  • preparation for obtaining certificates for medicines or other scientific developments.

How reliable is it? 

Virtual Data Room provides enhanced security for hosted documents based on centrally managed policies. Access to them can be obtained only after authentication (most often two-factor), while the rights are configured much more flexibly than in public cloud services.

Virtual Data Room gives an opportunity, for example, to allow viewing of a document (and in some cases – part of it) in the browser, but prohibits downloading. It implements protection against man-in-the-middle attacks, and access permission can be revoked or granted for a limited period of time. At the same time, the client software itself controls the deletion of documents on the side of users and blocks the download of files located in the storage.