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4 min read

What are the Benefits of Data Classification?

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Written by
Phil Guerin
Published on
December 7, 2022

Data classification is a critical component of any data protection and data compliance strategy, helping businesses to better identify, protect and manage data based on its specific categorization.

This process works by first identifying business data, and then tagging data into specific categories in order to categorize data based on factors such as file type, its contents, which compliance policies it is regulated by and other metadata.

By using data classification to improve how your organization is able to locate and retrieve sensitive data, your business is able to both better identify and protect data based on its risk as well as improve compliance processes.

In this blog, we’re going to take a look at how data protection is typically implemented, as well as some of the top benefits that organizations can realize from implementing successful data classification.

Common methods of data classification

From a data protection perspective, data classification is the process of categorizing data according to its level of sensitivity or value to the organization.

Data classification can also include tags associated with compliance. For example, data within your organization that must comply with the European Union’s GDPR will be tagged into that category to ensure employees handle that data appropriately.

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Typically, there are four common types of data classification based on sensitivity:

  1. Public data: Information that can be freely accessed by anyone with no restrictions or regulations.
  2. Internal data: Information that should be kept within internal company networks, but has little consequence to the business if there is unauthorized access.
  3. Confidential data: Data that should be confined to a specific department (or team) within the business. This includes sensitive data that should not be disclosed.
  4. Restricted data: Information that is strictly confidential and only specific authorized individuals can access it. This data may even be protected with non-disclosure agreements (NDAs).

As information moves from public data to restricted data, its sensitivity level moves from low to high. Categorizing it as such can help organizations prioritize their data protection strategy based on risk.

Data classification can be done in one of two ways. Either through paper-based classification in which written policies set out how employees are required to treat the different types of data that they handle, or through automated data classification software which runs in real-time across your network identifying sensitive data and automatically implementing your company’s classification policy where required.

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Data classification - the benefits

Organizations that fail to apply data classification or at a significantly greater risk of data breaches and compliance issues. Data classification is critical when it comes to building a strategy that prioritizes data protection based on risk and enforces compliance policies across internal teams.

With that in mind, here are a few of the top benefits that come with data classification:

✔️ Better identify your threat risk and improve data protection

Data classification gives your organization the visibility it needs into its sensitive data, so that you can clearly see your attack surface risk. You can use this information to implement a data protection strategy that focuses on your more at-risk and most sensitive data first.

✔️ Regain control of your data

All too often companies hold vast amounts of data with absolutely no visibility into what data they have, where it lives or how it is being managed. This is a recipe for disaster. Data classification puts you back in control of your data, so that your business knows exactly what data it has and how it is being used.

✔️ Better meet your data privacy compliance requirements

When you are able to categorize information based on which data privacy requirements it must comply with, your company will be able to better enforce data privacy policies that ensure you meet legal and regulatory compliance requirements. In addition, data classification keeps a detailed trail of how information was used, helping to prove to regulators that data is being appropriately controlled and documented.

Are you interested in learning more about how you can implement a successful data classification strategy? The Cavelo attack surface management platform has been to automate data classification, empowering businesses to improve their data protection strategy and also save time.

Download our data protection solutions guide to learn more about data classification types how they stack up against compliance requirements.

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