Why Data Retention Is Crucial to Protect Sensitive Data

Data is to business as oxygen is to humans.

Without the right amounts, you could die – which usually means the end of your business. But, just as too much oxygen can kill you, too much data has its own negative impacts.

Retaining data longer than needed not only impacts risk, it also creates costs and slows down how quickly an organization responds to a breach. Data retention plays a crucial part in your organization’s incident response plan, yet many overlook this essential step in protecting their organization from harmful hacks, cyber attacks, and data breaches.

Businesses frequently use data destruction software to delete data traces completely. However, it's imperative to understand the importance of setting up data retention policies and how cutting corners can clog the pipes of your business and drain the life out of your data-driven efficiencies.

Every organization must develop and implement data retention policies to meet these and other business requirements.

Over the past decade, data has become a critical asset for virtually all organizations, especially those in business-to-consumer (B2C) industries. However, storing data isn't a decision to be taken lightly. Data retention is critical for modern organizations. Too much information costs you time and money, hurting your productivity. But too little information costs you money, time, and your reputation.

Storing customer data is a must, but keeping it in storage indefinitely also isn't an option. Businesses need to determine how long they can keep data within their systems and delete it when it expires. Data retention policies are crucial for maintaining customer data security and ensuring compliance with organizational requirements and industry regulations.

Data retention requires that organizations meet specific security standards, develop policies and procedures to expedite these regulations, provide training and education for all employees, and design a system for meeting the requirements. To do so, you should develop a plan of data retention policies and procedures to identify the following: sensitive data elements, the sensitivity of each data item, how long each data element can be kept according to regulations, how those who access the data will use it, and how to securely dispose of data.

Why is data retention important?

Data retention has long been critical to the success of virtually any type of business. Previously, this meant archiving documents that could be retrieved when needed, often keeping those documents for decades before discarding them. Today, electronic data retention has made the task more accessible, which is good because document retention is more important than ever if a company wants to protect its own and its customers' interests.

Legal requirements are one of the most important reasons for developing and implementing a robust data retention strategy. Simply put, any document about business functions may include information that could be beneficial to the company in the event of a dispute.

The preserved documentation makes it easy to recreate significant events and dates and prove business executives' comments about what they did and didn’t do concerning that specific lawsuit. Assuming the data retention scheme is comprehensive, efficiently preserving records can save the organization a significant amount of time and money in any form of legal action, including tax concerns, events involving personnel, or covenants established with consumers.

Along with providing data that could be essential in resolving a legal issue, effective data retention practices offer the opportunity to deliver improved customer service. The capacity to track events that occurred years ago with a particular customer can pave the way for resolving an issue that has just emerged. It may also provide fuel for some new product or service that could be appealing to more than one consumer.

Efficient data and records management can enhance key business processes and assist the company in meeting its legal, statutory, and regulatory commitments. In recent years, there has been a greater emphasis on data privacy, which has resulted in increasingly complicated rules and regulations throughout the globe.

For example, publicly listed businesses in the United States must adopt a retention strategy to fulfill the Sarbanes-Oxley Act's (SOX) data retention obligations. Similarly, healthcare institutions must comply with the Health Insurance Portability and Accountability Act's (HIPAA) data retention obligations.

Furthermore, firms that receive consumer payments (such as credit cards) must follow the Payment Card Industry Data Security Standards (PCI DSS) data retention and disposal rules. Any organization that collects and analyzes the personal data of EU individuals anywhere in the world must follow the European Union's General Data Protection Regulation (GDPR) data retention standards. 

Data retention guidelines must describe what data is being collected, why it's being gathered, where it's being maintained, and the retention term to comply with GDPR.

The capacity to generate reports using archival data allows organizations to identify trends and develop ideas that would not have been feasible otherwise. According to this viewpoint, data retention is more than just producing and preserving a record of the past – it’s also about establishing a resource that may be used in the future.

What is a data retention period?

A data retention period, sometimes known as a record retention period, is the amount of time that a business retains records. Companies must save various types of data for different amounts of time. 

Best practices suggest that data is maintained for as long as practical. However, various laws and regulations have particular criteria for data retention periods, so it's critical to complete your study before deciding on a duration for a data retention policy.

How long is a data retention period?

There’s no definitive answer to the issue of how long a data retention period should be. It all comes down to preference. It's determined by the type of data, the purpose for which it was gathered or generated, whether it’s still regarded relevant, and other factors based on the regulations.

While certain rules, such as HIPAA, mandate that information is kept for at least six years "from the date of its inception or the date when it was last in effect, whichever is later," not all regulations specify time limitations.

What is a data retention policy?

A data retention policy, also known as a records retention policy, outlines how long a business will keep various types of data for operational or regulatory compliance purposes and how it'll dispose of that data after that duration. A data retention policy is a component of an organization's overall data management strategy.

When developing a data retention strategy, you must consider how to organize data so it can be searched and retrieved later. You must also decide how to dispose of data that’s no longer required. Some businesses believe that using a data retention policy template is beneficial because it provides structure. A thorough data retention policy describes the business reasons for preserving specific data and what to do with it when it's up for destruction.

A basic data retention policy should specify details about documents and data organization, retention periods, and storage systems or devices used to save them. These elements are typically based on industry guidelines.

Data retention policy example

The lifespan of a data retention policy can range from minutes to years. A policy engine should include multiple fields, such as user, department, folder, and file type.

Businesses must include email communications in their data retention policy. Emails pile up rapidly, and some take up a lot of space, so establish a sensible retention schedule. As with the data retention policy, the IT staff should collaborate with legal on the email retention timeline.

In terms of targets, object storage is a standard option in a data retention strategy since it provides good data security at a low cost. Another typical repository for data that requires longer retention is public cloud storage. It’s often less expensive than on-premises storage, particularly in low-access levels. Cloud service providers provide off-site data protection, which is critical if the organization's primary data center fails. The restoration speed is determined by the tier and amount of data collection.

Furthermore, tape continues to play an essential role in long-term data preservation. Infrequently accessed historical data does well on tape, which takes longer to repair than other formats. Storing data on tape for years is usually less expensive than keeping it on the cloud and consumes less energy than disc storage. Tape, like the public cloud, enables off-site storage.

Most businesses that deal with customer data frequently mention their data retention strategies in their privacy policy. For example, G2’s data privacy policy educates consumers on the company’s data retention policy and retention periods.

Components of a successful data retention policy

A data retention policy should specify how the business will backup, archive, and destroy paper and digital documents. The final draft should be comprehensive and unified, incorporate input from several groups, and apply throughout the business. The policy can be amended or modified, and teams must record any changes within the document.

A data retention policy can comprise any or all of the following sections:

• Relevant legal and business requirements: This section should explain the commercial and legal reasons for data retention and backups. It should be modified when needs and legislation change.
• Data retention policies and procedures: Each record and data type will have various retention timeframes and protocols. Consider the data storage location, backup techniques, and retention period. Specify the role or team that owns and manages each data type. It's also necessary to specify which sorts of documents don't need to be kept and destroyed immediately.
• Steps for data destruction: It’s critical to specify the applicable data destruction processes once the retention period expires. Specify the method for shredding paper documents. Indicate which digital files must be removed manually and which are automatically cleaned by the system.
• Data archiving procedures: Some data isn't necessary for day-to-day use but is archived for regulatory and compliance concerns. Archival protocols define the document formats, storage locations, and recovery methods. Perhaps certain paper documents are kept off-site and only retrieved when needed. Data teams can keep specific digital files on various servers to ensure rapid response time and reduce clutter on local servers.
• Exception processes: The enterprise can make various exemptions to its usual data retention, deletion, or archival methods. Defining these exclusions in the data retention policy is critical to avoid confusion or misinterpretation.
• Appropriate actions for discovery, legal, or audit requests: Businesses must have a uniform response to discovery, legal, or audit requests. This section should define the response procedure, who is accountable for making the response, and how it will be documented.

How to create a data retention policy

Creating a data retention policy is not an easy task. Some businesses find it more cost-effective to outsource the policy planning and execution process than doing it in-house. There are six essential processes for companies to follow when developing their own data retention policies:

1. Identify the owners of critical data

Data is frequently siloed in sectors. For example, the sales team owns sales data, the finance department owns financial data, the HR department owns employment data, and the IT department owns log data. Develop a data retention policy by first identifying key data owners within your company, obtaining their approval, and forming a project team that includes all data owners.

Because each department or owner will be responsible for managing their data per the data retention policy, it's critical to have everyone invested and involved in the process.

2. Sort data into meaningful categories

The next stage in developing a data retention policy is to describe your data. Make a list of all the data types collected by your business. When you've finished the list, divide data into groups depending on where it was created or its intended purpose.

Each type of data you specify could be susceptible to special data retention regulations and business constraints. To account for this, you'll need to research and develop unique data retention rules for each data type your company gathers.

3. Perform a policy and business needs analysis for each data type

The next step is to undertake a policy evaluation. Conducting these assessments will allow you to better picture how your organization uses its data. You could even find some new and essential applications for the data you're already gathering. 

Finally, you'll be able to determine the exact data retention rules that apply to your information - keep in mind to verify legislation in every country you operate!

4. Create a new retention policy for each data type

You've segmented all of your corporate data and explored each data type's business use cases and compliance requirements. You can now evaluate the storage location, retention period, and appropriate data destruction methods depending on the collected information.

In addition to broad recommendations for things like revision histories and policy exclusions, your data retention policy should contain a communication strategy for data retention challenges. It’s best to outline a plan for ensuring compliance with your record retention policy.

5. Create SOPs for data retention, archiving, and destruction

Standard operating procedures (SOPs) define the processes and technology your company will employ to store, preserve, archive, and delete data per your established data retention policy. Employees can carry out data retention regulations or they can be automated with software.

AWS and other public cloud suppliers provide services that automate companies’ data retention rules in the cloud. Two common examples are Amazon S3 Intelligent Tiering, which intelligently moves data between cost-optimized storage tiers depending on user usage patterns, and Amazon S3 Object Expiration, which allows data owners to schedule the destruction of data objects in S3 buckets.

6. Put your data retention policy into action

You should now have everything you need to put your data retention policy into action. Now it’s time to implement your data retention policy and ensure compliance across your business. 

You'll need to inform department heads and their teams about the new approaches and expectations, make sure data owners are aware of any new commitments, stress the importance of compliance, enforce any new processes or technologies needed to support your data retention strategy, and provide additional training as required.

Data retention best practices

Every company has different demands when developing an effective data retention policy. Nonetheless, businesses should follow a few best practices when creating a data retention policy. 

• Recognize legal responsibilities. Companies must establish the rules and regulations for their data retention requirements and include those requirements in their data retention policy.
• Assess the company needs. Developing an efficient data retention policy entails more than simply following the rules. The retention policy must also consider the business needs of the company. Operational reasons may necessitate data to be kept longer than is legally necessary.
• Be honest and transparent. Inform your customers, subscribers, and users about the data you plan to save, its maintenance, and data handling. Give them as much control as possible over how their information is handled.
• Delete data when it’s no longer needed. Many businesses fail to implement this fundamental data retention protocol because they assume that keeping data longer than necessary is more secure than deleting it and retrieving it later. This, however, couldn’t be further from the truth.

Benefits of data retention

While regulatory compliance is the primary motivation for businesses to implement a data retention policy, it also has other advantages. Data retention is at the heart of data management. Paper documentation and electronic information both drive the activity of businesses, and enormous quantities of digital data are typically hard to store or categorize in traditional file systems.

Discovering and collecting accounting records, customer interactions, electronic communications financial data, sales data, and other mission-critical digital company data helps with more than maintaining compliance. These practices also help firms resume operations following a disaster by backing up the relevant data on a sufficient regular schedule to rebound from catastrophes.

Regularly evaluating your data retention strategy allows your company to eliminate old and duplicated files. Getting rid of redundant and out-of-date material speeds up searches, minimizes confusion, and improves user experience. 

Smarter, more streamlined data retention practices can free up room for new data and files, allowing for additional storage. Migrating older data to the cloud and deleting copies can be part of your digital data retention strategy. With decreased storage costs and higher speed, the entire process saves time and money in the long run.

Challenges of data retention

Data continues to grow at an alarming rate, not just in primary storage but also in data backup and archives. Backup is more stressful when the same data is backed up many times. A data retention program is one method of reducing the quantity, and eventually, automating the process of keeping data sets.

Establishing a data retention guideline, on the other hand, is difficult. Setting a data retention timeline also isn't easy. Companies must keep certain data sets varying amounts of time for legal and operational reasons. 

A company must exercise caution, mainly if it uses an automated data retention system. Storage might sometimes be a hassle. That’s why, to optimize budget, a suitable data retention policy specifies the kind of storage where retained data is stored.

Data retention is important (but you already knew that!)

Data retention is becoming more challenging as companies face competing demands to maximize the value of data and legal responsibilities in order to comply with an increasing number of data retention rules. Organizations can reduce data storage costs, all while maximizing data value and complying with local and international data retention rules and regulations by developing and executing a thorough data retention strategy.

Are you worried about email retention? Learn how businesses can avoid data loss with email archiving.