A data room is an electronic storage solution that lets documents be kept in a secure environment. It also comes with a host of features that help with the due diligence. These tools include annotation tools with granular permissions and access, activity tracking and watermarking.

Data rooms are typically used to share security documents with clients (SOC 2 documents or compliance certificates) to support due diligence. Sharing this information with other parties before the deal is closed is a great strategy to speed up the due diligence process, and also reduce the risk.

Email is a method utilized by companies to share SOC 2 documents and other documents. Although this is a good idea, it’s inefficient and leads to problems with controlling versions. It’s also not secure, due to the increased number of attacks on email, which can result in compromised mailboxes, stolen credentials and phishing exploits.

Many secure file-sharing and storage services like Box or Dropbox offer document availability on any device and at any location. They offer a high level of security, but most companies and individuals require more. sensitive documents that are used to conduct due diligence, fundraising or negotiations should be saved and shared in software that provides more security levels than the personal file-sharing software.

The most important question you should ask any’secure data room’ is does it prevent authorized users from sharing documents with non-authorized users? Unfortunately the answer to this is usually not. Most’secure data rooms’ don’t even limit how many times the same user’s credentials can be used to access the system. Users can use logins on their personal devices or copy and paste an URL into the browser of a friend’s PC.