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What is Data Loss Prevention (DLP) and Why Is It Important?

By Anas Baig | Reviewed By Omer Imran Malik
Published February 26, 2023 / Updated December 20, 2023

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Every day organizations are monitoring data loss and personal data breaches from either internal or external threats. Almost a decade ago, the loss or breach of a few million people’s data was considered catastrophic, and these days organizations have reported billions of records being lost or stolen due to negligence, external attack, or insider threats. Data loss or a personal data breach is a security incident leading to the unlawful and accidental destruction, loss, alteration, or unauthorised disclosure of or access to personal data transmitted, stored, or otherwise processed by an organization. It compromises the security and confidentiality of a data subject’s personal data, thereby sometimes resulting in significant harm, including material or physical damage as well as emotional distress to the data subject.

According to IDC, by 2023, 102.6 zettabytes of new data will be created every year. These 102.6 zettabytes will most certainly be scattered with the personal information of individuals. All this data gives a larger surface area for attackers to perform malicious activities.

The next step for organizations is to implement an efficient data loss prevention system in order to protect all this data and while staying in compliance with privacy regulations. This article speaks about Data Loss Prevention (DLP), its importance, and the best industry practices.

What is Data Loss Prevention?

Data loss prevention refers to measures that an organization takes to prevent data losses and personal data breaches. Such measures include a variety of security controls that are both preventative (security measures to limit personal data breaches) and remedial (mitigation measures to limit the impact of a personal data breach that has happened) in nature.

There are three types of data that need to be protected within an organization. These types are as follows:

Data in Transit

This is any data that is being transferred from one location to another. This transmission of data can be both internal and external. This data needs to be encrypted to avoid any data sprawl. This encryption can take place through SSL and VPN.

Data in Rest

This is any data that is either archived or stored within organizations. Data Loss Prevention (DLP) tools encrypt data in the database which can apply to fields, tables, and databases.

Data in Use

This is any data that is currently being processed by the organization. Certain DLP tools can help organizations monitor unauthorized activities that users may intentionally or unintentionally perform in their interactions with data and flag them.

According to a study by Ponemon’s Institute, 85% of companies globally have experienced some form of data loss in the last 24 months. Most of this data loss is attributed to missing devices as well as negligent employees and other avoidable issues.

Countries all over the world are increasingly drafting privacy regulations to ensure that data losses are minimized and organizations become responsible custodians of their customers' personal data.

Importance of Implementing a Data Loss Prevention Solution

Most global privacy regulations require organizations to implement appropriate security controls to prevent data losses or data breaches as well as to notify the appropriate regulatory authorities and data subjects if a personal data breach takes place.

Personal Data Breach Notification Obligations
GDPR
Notification Obligation Where a personal data breach is likely to result in a risk to the rights and freedoms of natural persons, the organization must notify the regulatory authority without undue delay and not later than 72 hours after having become aware of it. Where a personal data breach is likely to result in a high risk to the rights and freedoms of natural persons, the organization must notify the data subject without undue delay.
Notification Timeline 72 hours to notify the regulatory authority and without undue delay for notifying the data subject.
CCPA (read with Cal Civ. Code 1798.80)
Notification Obligation Notification for personal data disclosed during a data breach incident has to be made to affected data subjects if the personal data was not encrypted. Notification to the Attorney General of the State of California has to be made only if the organization is required to notify more than 500 Californian residents as a result of a single breach of the security system.
Notification Timeline In the most expedient time possible and without unreasonable delay.
LGPD
Notification Obligation Security incidents that may result in any relevant risk or damage to data subjects need to be notified to impacted data subjects and the Autoridade Nacional de Proteção de Dados (ANPD).
Notification Timeline Within a reasonable time, as defined by the regulatory authority.
Personal Data Breach Notification Obligations
GDPR CCPA (read with Cal Civ. Code 1798.80) LGPD
Notification Obligation Where a personal data breach is likely to result in a risk to the rights and freedoms of natural persons, the organization must notify the regulatory authority without undue delay and not later than 72 hours after having become aware of it. Where a personal data breach is likely to result in a high risk to the rights and freedoms of natural persons, the organization must notify the data subject without undue delay. Notification for personal data disclosed during a data breach incident has to be made to affected data subjects if the personal data was not encrypted. Notification to the Attorney General of the State of California has to be made only if the organization is required to notify more than 500 Californian residents as a result of a single breach of the security system. Security incidents that may result in any relevant risk or damage to data subjects need to be notified to impacted data subjects and the Autoridade Nacional de Proteção de Dados (ANPD).
Notification Timeline 72 hours to notify the regulatory authority and without undue delay for notifying the data subject. In the most expedient time possible and without unreasonable delay. Within a reasonable time, as defined by the regulatory authority.

To fulfill the afore-mentioned breach notification requirements, organizations must have a system and process in place. Data Loss Prevention allows organizations to not only adopt suitable security controls to avoid any security incidents, data losses, or personal data breaches but also to notify regulatory authorities and impacted data subjects on time, as per the requirements of applicable privacy regulations.

Threats of Data Leaks

There are two possible types of threats that an organization can come across which may lead to data loss or breach. These threats are broadly classified into internal and external threats.

External Threats

These are threats that stem from outside the organization, involving getting unauthorized access to data within the organization. These are seen as the most frightening attacks but not the most effective as we will read further. These attacks come from sophisticated and highly skilled external hackers. These hackers can find network vulnerabilities within your system or socially manipulate employees to get past preset network defenses. Since an organization’s software applications run on open connections to IT databases, hackers aim to breach these applications and get inside, often by seeking application passwords set to their defaults.

Internal Threats

Internal attacks are often argued by organizations to be more dangerous than outside attacks. Willful attackers within the organization commit a large portion of database breaches. These can stem from disgruntled employees who abuse their privileged access to damage their organization. Others can be infiltrators who work for external intelligence or hope to sell the organization's information for profit to their competitors. Malicious insiders that have full access to organization servers are difficult to stop. Organizations can implement policies such as thumb drive policies, which aim to prevent leaks such as the high-profile one involving Edward Snowden, but these policies are hard to maintain.

Data Loss Prevention Best Practices

While ensuring data loss prevention is a rigorous process that takes both time and resources, here are some of the best practices an organization may adopt:

Prioritize Data

It has been mentioned numerous times how organizations now produce extraordinary volumes of data. Even by leveraging the best tools available, there is a critical need to prioritize data to ensure efficient management of such data. Prioritization not only helps ensure the most critical and sensitive data resources are afforded the appropriate security but also helps comply with any regulatory needs related to special care required for sensitive data.

Classify Data

The task mentioned above of prioritizing data can be effectively accomplished by efficiently classifying and categorizing all data assets in an organization’s possession. Doing so helps organizations appropriately index their data with the relevant classification tags and makes navigation easier for better insights to be driven from such data.

Monitor Data Movement

Data is often at rest, i.e., not currently accessed by anyone, or can be in motion, i.e., accessed by multiple personnel and systems. Appropriately monitoring and identifying all such movements of data can help develop policies related to the use, disclosure, and access to such data, mitigating chances of data loss.

Access Management

Appropriate data access management can help organizations ensure only the most essential and relevant personnel gain access to data.

Train Employees

This goes without saying, but even the best practices and software cannot do much for an organization if its employees are not adequately trained and educated about leveraging their maximum potential. More importantly, regular employee training can eliminate any chances of accidental data loss.

Use Cases for Data Loss Prevention

There are 3 main issues that a data loss prevention solution can solve. These three objectives are normally the same for every organization, which are; how to protect personal information, how to protect intellectual property, and how to offer complete data visibility. We will look into how each of these use cases are fulfilled with DLP.

Personal Information Protection

Most, if not all organizations store personal information. This could range from Personally Identifiable Information to PHI or even PCI. The main objective for any organization storing this type of data is to protect it while staying in compliance with regulations such as GDPR or HIPAA. A DLP solution can help organizations identify this data, classify them based on their type, tag sensitive data and monitor the activities that have been undergone on the data. This deals with the protection of the information and the added ability to create reports also lead to compliance with privacy regulations.

IP Protection

The context-based classification functionality within a DLP solution can classify your intellectual property within structured and unstructured forms. The policies and controls that are set in place can help you protect company secrets and important intellectual property from unwanted exfiltration.

Data Visibility

A DLP tool can help you track data at your endpoints, networks, and on the cloud. This tracking can offer you 360 visibility on how users are interacting with stored data within your organization.

How to Prevent Data Leakage?

Here are some of the best strategies that can help an organization prevent any possible leakage and data loss:

Evaluate Third-Party Risk

Organizations may have the most rigorous and resilient internal data protection and security policies, practices, and mechanisms. Yet, they may still fall victim to data loss due to negligence by a third party with access to your data.

Unfortunately, there may be instances where your third-party vendors may not share your organization’s proactiveness in countering data losses. The best and most effective way to identify such vendors is via regular vendor risk assessments that identify all relevant third-party security risks while ensuring compliance with regulatory requirements.

Monitor Network Access

An organization’s network activity can often be the most basic but insightful way of assessing and monitoring any possible suspicious activity. In most cases, cybercriminals usually conduct detailed reconnaissance of their target network before launching an attack.

During such a reconnaissance activity, an organization has the best chance of identifying and eliminating the chances of a significant incident. Organizations may leverage various mechanisms and several software solutions that may help an organization do just that.

Secure Endpoints

An endpoint is any remote access point communicating with a business network via the end-user device. Most commonly, this includes IoT devices, laptops, and smartphones. For organizations with a significant portion of their workforce personnel working remotely, it is critical to secure all their endpoints.

Cloud-based endpoint security must be a critical priority in such instances, with appropriate firewalls and VPNs the base later with other software designed to combat endpoint threats being leveraged as well. Employee trainings and regular updates are also important in warding off any phishing or social engineering attacks.

Encrypt Everything

This may seem simple, but it represents one of the most effective ways an organization may prevent data leakage. Provided an organization adopts a rigorous data encryption protocol with the latest standards, cybercriminals of any ilk would struggle to find any exploits.

Access Controls

Often, the most devastating threat to any organization’s data assets isn’t a well-coordinated external malicious actor but an innocuous mistake by an insider. Most organizations without appropriate data access controls have a data architecture where anyone can access any data, even if their job description or the nature of their role requires access to it.

Access controls are critical in shoring up any non-technical and internal threats to your data by allotting data access privileges based on a hierarchy of needs. Not only does it ensure only relevant personnel gain access to critical data, it also documents all instances of access in the event of a future breach.

Conclusion

Data is becoming the most important asset for any organization and protecting it is now not only necessary but also obligatory. In order to have your data protected as well as stay compliant with privacy regulations such as the CCPA and GDPR, organizations need to have a strong Data Loss Prevention tool implemented on their systems if they are looking to keep their data protected and their organization compliant.


Frequently Asked Questions (FAQs)

Data loss prevention (DLP) is a set of strategies, tools, and practices to prevent sensitive or critical data from being lost, leaked, or accessed by unauthorized parties. It involves measures to ensure data security, confidentiality, and compliance with regulations.

Data Loss Prevention (DLP) is a cybersecurity approach that uses technology to monitor, detect, and prevent the unauthorized transmission or use of sensitive data. It involves identifying sensitive data, monitoring data flow, and enforcing policies to prevent data breaches or leaks.

The three steps of data loss prevention are:

  1. Discovery: Identifying sensitive data and its locations.
  2. Monitoring: Tracking data movement within and outside the organization.
  3. Response: Enforcing policies to prevent data breaches and leaks.

DLP (Data Loss Prevention) focuses on preventing unauthorized data access, transmission, or leaks. EDR (Endpoint Detection and Response) focuses on detecting and responding to advanced threats and malicious activities on endpoints (devices) within a network.

Three possible causes of data loss are human error (accidental deletion or misplacement), hardware failure (disk crashes), and cybersecurity breaches (hackers, malware, ransomware).

An example of a data loss prevention system is a software solution that scans emails and attachments for sensitive information and prevents the sending of those emails if sensitive data is detected. It can also monitor and control data transfers to external devices.

The main objectives of data loss prevention are to protect sensitive data, prevent unauthorized access and sharing, ensure compliance with data protection regulations, reduce the risk of data breaches, and maintain the trust of customers and stakeholders.

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