How data residency impacts security and compliance

Every piece of your organization’s data is stored in a physical location. Even data stored in a cloud environment lives in a physical location on the virtual server. However, the data may not be in the location you expect, especially if your company uses multiple cloud providers. The data you are trying to protect may be stored literally across the world from where you sit right now or even in multiple locations at the same time. And if you don’t know where your organization’s data is stored, it may not be as secure as you think.

The location of your data, referred to as data residency, can make a difference in best practices. Not knowing your data’s residency makes it challenging, if not impossible, to reduce your organization’s risk. You are unable to add additional protections both in terms of encryption and best practices.

Here are two reasons you need to know the data residency of your data:

• Security: Data in specific locations, such as multi-cloud data, requires additional security precautions. The 2023 IBM Cost of a Data Breach Report found that 39% of breached data was stored across multiple types of environments. If you are not aware your data is in a high-risk location, you are unnecessarily putting your customers, employees and organization at risk.
• Compliance: Some data requires specific compliance regulations. If you do not know the data’s physical location, you either must pay higher costs to meet the requirements for all data or risk not meeting compliance for some data.

With a physical on-premises data center, organizations can only store a certain amount of data before it becomes necessary to purchase additional equipment and acquire more space, often at a significant cost. Storing data in the cloud is typically less expensive, which allows organizations to afford to store a much higher volume of data.

IT organizations are increasingly using a wide range of options for storing the ever-greater volume of data their companies are collecting and storing. Many use multiple cloud providers, and the data and services used to manage and analyze data are now across private, public or hybrid clouds.

Many organizations confuse data residency and data sovereignty, which are two different things. Data sovereignty determines which country or region controls the data in terms of legal and regulatory mandates. In most cases, data residency determines data sovereignty, which then dictates the data privacy regulations that must be followed.

Organizations delivering hosted services online are at even greater risk. The organization is responsible for following all compliance regulations in all the regions where customers are located. To meet compliance regulations, you must know the location where all your customers’ specific data is stored. Otherwise, you are at risk of large fines and damage to your reputation if you don’t meet a location’s regulations.

The first step to understanding your data residency is to determine the type of storage for each data set, such as private cloud, CSP or on-premises. By creating a map for all data, you can begin to get a picture of your data residency. Next, determine the physical location of every cloud service provider’s data center and research where your data is located. Once you have determined the residency, you can research the sovereignty to understand the regulations that need to be followed.

Understanding data residency is a critical but often overlooked step. Because the volume and location of data have quickly ballooned, initially, getting a handle on data residency may be time-consuming. However, once data residency and data sovereignty are integrated into your best practices, staying on top of the security and compliance regulations becomes much easier.