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 | Why Locklizard for a secure data room & secure document sharing? |
Security issues, poor performance (speed of rendering, scrolling & searching), fixed document structures, yet another system for you and users to use – these are just some of the reasons why you should consider Locklizard Document DRM security over a secure virtual data room.
Locklizard takes your document security seriously – see why secure virtual data rooms are just snake oil.
Share documents securely without insecure JavaScript, passwords or plug-ins, and enforce access, location, expiry, and usage controls for both online and offline documents. Protect confidential and sensitive business documents – due diligence, compliance, litigation, M&A, fundraising and corporate transactions – regardless of location with US Gov Strength encryption, licensing, and DRM controls.
Business requirementsIn any enterprise, there’s information that has to be kept secret, but must be distributed, and therefore has to be identified with any recipient in the event that it is ‘leaked’.
Here we address two examples of this requirement and show how to identify secure data room solutions that meet business needs. The first example is the control of board of management information, and the second is the control of information exchanged during mergers and acquisitions (M&A).
Sharing documents securelyThe critical feature of both of the above scenarios is that highly confidential information and documentation has to be made available to people who are not necessarily to be ‘trusted’ because their personal future is not determined by maintaining the confidentiality of the information. That is not to be interpreted in a negative fashion. Independent directors are an essential component guaranteeing the governance of an enterprise. Potential sellers of an enterprise do not want to reveal secrets, unless, perhaps, they are jilted at the altar of acquisition.
So, there’s the problem in a nutshell. There are many occasions at which you are obliged to share secrets with people who you cannot control, and you must take any steps you reasonably can to reduce their ability to cause harm.
Board minutes are only just one example of internal documents that need to be strictly controlled, yet have to go outside of the control of the enterprise – though admittedly a high stakes one. They can contain material that, should it become public for any reason, could have a significant impact upon the share price and future status of the business.
In mergers and acquisitions, the stakes are, perhaps, just blindingly obvious. Information disclosed in the M&A process is usually highly confidential and misusing the knowledge surrounding that range from simply being commercially sensitive to requiring serious explanation to the share trading body of the enterprise’s country. To put it bluntly, inappropriate disclosure could result in jail time.
What is a data room?A typical secure docs data room relies upon access controls to prevent unauthorized users from gaining access to information (due diligence, compliance, litigation, corporate transactions, fund raising, etc.). This may be achieved in a number of ways. For users connecting on an internal network, it may simply be login ID and password that grants uncontrolled access to everything defined for that user.
When outsiders need to be given access to information, IT departments create areas on servers, sometimes called virtual data rooms or online data rooms, where information can be stored and access controlled through the use of one or more specific logon id/password combinations. Sometimes incoming IP address monitoring also plays a role to limit the potential for people to give their logon details to others (assuming of course they are not all connecting via a proxy using the same IP) and thus defeat the access control.
This latter approach also allows a degree of monitoring of user activity through the use of cookies, and it can be made to appear more secure by using the SSL service to encrypt the information being transferred between the ends.
What neither of these IT approaches achieves is the ability to prevent the authorized user from taking copies of information to which they have legitimate access and passing those copies on to others. They also do not provide any linkage that can identify the source of unauthorized distribution.
Alternate approaches to data roomsData rooms are just one way for businesses to share documents. Other online sharing solutions are available that provide different levels of collaboration, security measures, and ease of use.
Document collaboration platformsAn alternative approach, especially for internal systems, could be to use a document collaboration system such as MicroSoft 365 with Azure AD. These have various controls for defining user groups, and it may be possible to allow outsiders to have access by making outsiders appear to be insiders (rather like the IT solutions considered above). What is more problematic about this type of solution is that collaboration systems expect documents to be editable, and that there is some hierarchy of users where some approve documents. Commonly in the business cases described above, information is authorized before it is made available, recipients are not allowed to change anything, and some activities, such as printing, may need to be forbidden, or tightly controlled. Ease of use is also an issue – they use policies to control access and use, which are often complex to setup and administer.
A simpler document collaboration system is Google Docs. There are no complex policies to setup, and you can easily give access to third parties. The downside however with Google Docs is weak security – users can add some text to the URL in the browser and disable JavaScript to bypass all restrictions. While Microsoft Rights Management has also been broken, it requires some technical skill to bypass restrictions.
DRM solutionsThen there are DRM based solutions. These have significant benefits over the other solutions described, because they can allow authorized recipients to use information without having to grant them access either to internal networks or to servers. Documents are locked to physical devices so they cannot be shared and keys are not made available to users (unlike simple login credentials to an online service).
Where access is granted for limited periods of time this can be automated so that documents are revoked automatically with no manual effort. Alternatively, access can be switched on and off again as suits the situation. These facilities are significantly different from administering ‘secure data rooms’.
Finally, DRM solutions have additional features, such as being able to link the authorized user’s identity to viewed images and printed images. This dissuades them from sharing information in an inappropriate manner and prevents authorized users from being able to readily pass on copies of controlled information.
Cloud based secure data rooms & secure virtual data roomsThe most common type of secure data room in use today are cloud-hosted secure data rooms, also known as online data rooms, or virtual data room solutions. An example of a virtual data room provider is DocSend, but there are hundreds of other virtual data room vendors such as Intralinks, Firmex and Digify that offer startups and mature businesses a solution to sharing fundraising, private equity, IPO, and other sensitive information.
Virtual data rooms enable companies to securely share confidential business documents with third parties without having to invest in infrastructure or spend time setting up access control systems. At first glance, cloud-hosted secure virtual data rooms seem to be an ideal solution for secure document exchange with external groups. However, they do have some major security issues.
Virtual data rooms are typically used by businesses to house and share documents of a sensitive nature. They are especially common during the merger and acquisition (M&A) process, where firms may need to share many confidential documents with outside parties and potential buyers.
You’ll also see virtual online data rooms used to secure contracts, financial transactions, partnerships, audits, as well as to communicate with lawyers and regulators, and more.
The security issues above are why secure data room systems are keen to show off their security credentials – i.e. how secure their hosting system backbone is. It needs to be secure with all those temporary files sitting on the server in plaintext while the files are decrypted. You might therefore ask: is encryption of data-at-rest in a secure room important? Well yes, if the server gets hacked – but there are clearly easier ways into the system (and to access your documents) than that.
Is encryption of data-at-rest in a secure data room important?
Encryption of data-at-rest in a secure data room is important, but it’s only part of the story.
If data is encrypted at rest (i.e. stored encrypted on a cloud server) that ensures hackers cannot access your documents by gaining entry to the server (assuming of course that encryption keys are not left vulnerable).
The main purpose of a secure data room, however, is to enable secure document sharing – allowing only those you have authorized to view protected documents. If authorized users can share links and login credentials with others, then hackers breaking into a server to try and access your documents may be the least of your worries.
Encryption of data-at-rest may not be the silver bullet you think it is – it is just one component of data room security.
What is the most secure virtual data room?
The most secure virtual data room system is one that can:
Many secure data rooms that advertise themselves as the ‘most secure data room’ or ‘highly secure data room’ do not provide any of these basic security features.
So, secure data rooms for secure document sharing?
Secure data rooms were developed using the techniques of a central control system administered by IT departments. They achieved considerable success, although they did not prevent their users from being able to obtain copies of documents and pass them on without detection.
Cloud hosted secure data rooms expanded on the need to share documents securely outside of the constraints of an internal IT system, but also have major shortcomings. These password-based systems have still not addressed being able to stop users sharing sensitive documents with others – they just provide better monitoring so you can see ‘who’ (what login details) has accessed what documents.
DRM solutions for documents that don’t rely on passwords or plugins provide a much more secure solution to document sharing and distribution. They provide better control over the use of documents, lock use to devices and locations so they cannot be shared, and provide better operational flexibility for those who have to set up and administer the secure distribution of sensitive information.
If you want to protect confidential and sensitive business documents, due diligence, compliance, litigation, corporate transactions, and other M&A deal documents from unauthorized access, distribution and use, then an installed Viewer that can lock documents to devices is the only effective way of sharing documents securely.
FAQs
The easiest way to set up a data room is through a virtual data room cloud provider. They require minimal set up and don’t require you to have on-site server infrastructure as you use their data centers. However, they also have many flaws (mentioned above), such as the ability to extract information from the browser cache, an inability to prevent screenshots, etc.
Despite the name, secure data rooms are anything but secure. While yes, the server space they’re hosted on is secure, the protection they are able to provide to content hosted on the service is very limited. If you are sharing confidential information or intellectual property with third parties then you need to be aware of these limitations.
Despite their ineffectiveness, data rooms do not come cheap. A data room provider will charge anywhere between $250-$1000 a month. An extortionate amount on the high-end considering that they don’t provide effective security.
Only if you have a high degree of trust in everyone involved in the due diligence process. As passwords can still be shared and document content may still be extracted, it’s easily possible for your M&A documents to leak. Also, some online data room providers serve documents over the Internet as images so features such as full-text search are not available. You therefore need to consider the usability of the system and functionality that you require for your M&A transaction. You may be better served by a document DRM solution.
Though both are based on the cloud and have secure server space, data rooms are more specifically geared towards the enterprise. They usually allow you to group users, have more permissions, gain insight into use via analytics, and grant a finer control over those permissions. Data rooms also usually make more effort to get security certifications.
However, it’s important not to get too caught up in these certifications and features. Though data rooms can be considered slightly better at protecting documents than DropBox, they’re still far from effective due to the username/password authentication most use, the inability for browsers to prevent many forms of copying, and the storage of temporary files.
An online data room enables users to view documents online in the browser, and provides additional controls over how documents can be used – such as preventing printing. Secure file sharing sites on the other hand provide restricted access to files and folders that users download for use on their local device. There are no restrictions on how those files are then used.
Locklizard PDF DRM security. With Locklizard you can lock documents to devices so they cannot be shared, provide offline use with full protection, prevent screenshots, stop copying, printing and editing, remotely revoke access and automatically expire documents. Unlike virtual data room solutions, we do not force users to access documents online (browsers are slow and provide weak security) and you protect documents offline for maximum security. While Locklizard is not a virtual data room provider, you can use our DRM software to create your own secure data room and brand it with your own logo and images.
