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What Is Data Loss Prevention?

Skye Schooley
Skye Schooley

Learn why data loss prevention is important and how you can implement a DLP policy in your business.

As more organizations rely on technology to perform business operations and store important information, data protection is a critical element of business success.

Data has become a hot commodity to cybercriminals. If your business doesn't have a proper data loss prevention (DLP) strategy in place, sensitive data like intellectual property and personal information (e.g., payment card information, Social Security numbers and health records) are at risk of being lost, stolen, or misused by attackers.

"In the digital age, with cyberattacks becoming a norm and a very serious threat to organizational and individual information, DLP is a subject both large and small businesses must take into account," Allison Jones, founder of Evolution Consulting and author of Measure Twice, Cut Once: Navigating Negativity in Toxic Relationships, told

What is data loss prevention?

Data loss prevention is a set of tools and best practices an organization uses to keep sensitive data from being lost, stolen or misused by unauthorized users. Although it is commonly used to protect from internal or external threats by attackers, it can also be used to prevent employees from simply losing or misplacing confidential information. An essential part of data loss prevention is hiring trustworthy employees and training them on cybersecurity best practices.

Data is classified into three "states" to best describe how it needs to be handled: data at rest, data in motion, and data in use.

  • Data at rest is information stored in the cloud, on a hard drive, or by another method.
  • Data in motion is information moving between two points, such as emailed files.
  • Data in use is information an employee is actively accessing or using.

Why do companies need DLP?

Every business, regardless of size, should prioritize data loss prevention; however, it is especially important for small businesses, according to Jones. Small businesses often falsely assume they are not attractive targets – which is precisely why they're so vulnerable to hackers and other bad actors.

"[Small businesses] are the most vulnerable because they typically do not have the infrastructure to prevent unauthorized use, and they can go out of business fairly quickly if they have no protections for their customers to prevent losses of valuable information," Jones said. "Losses of revenue and customer trust is difficult to get back, and the presence of legal action is becoming commonplace."

Here are some other reasons to prioritize DLP in your business:

Protecting your intellectual property and private customer information

In addition to protecting your revenue, maintaining customer trust, and avoiding litigation, the right data loss prevention solutions can help you protect your intellectual property and trade secrets, maintain your business's reputation, and comply with data security regulations.

"Failing to have strong enough security and access controls for sensitive data can result in fines and other penalties from government bodies or industry organizations," said Jesse Wood, CEO of eFileCabinet. "Any business that deals with private health information needs to adhere to HIPAA. Businesses that deal with customer payment information need to abide by the rules of PCI DSS."

Data visibility

With the right DLP software, you can gain useful insights on how your company data is being used. This intel can ultimately help you improve processes in your organization.

What are the common causes of data loss?

Both internal and external threats commonly cause data loss. You can mitigate these threats with a strong data loss prevention program.

External threats

Confidential data can be lost through external threats like cyberattacks. Data is a large asset to cybercriminals, and if your data ends up in the wrong hands, it could mean the end of your business.

However, Wood said that hackers rarely strong-arm their way into a business's database, but instead take advantage of lax security practices and human error on the part of the business's users. For example, malicious parties often exploit weak passwords. 

"Weak passwords are a big culprit of malicious parties gaining access to a business's internal network, and [they] often use that access to leak sensitive data," Wood said. "Hackers often engage in manipulation tactics to obtain access to data, most commonly through phishing." 

Internal threats

Outsiders are not the only potential threats to your data security. Although you may trust your employees, data loss stemming from an internal source is more common than you might think. An insider threat may come from an employee, former employee, contractor or business associate attempting to maliciously misuse critical data. A data breach can also occur from an employee accidentally downloading malware through an email link. 

"Whether intentional or not, data leaks that are a result of an end user's actions usually happen because of a lack of access control to sensitive data," Wood said.  

Bottom LineBottom line: Businesses face many cyberthreats, both internal and external, so a strong data loss prevention policy and the tools to support it are critical for any business.

Types of data loss prevention solutions

The type of data loss prevention solution you should develop for your business depends greatly on how and where your data is stored. Here are three major types of data loss prevention solutions that you may need to put to work in your business:

Cloud DLP

Cloud DLP solutions protect sensitive information stored on hard drives, flash drives and other physical media. With remote work on the rise and more applications, such as employee monitoring software, relying on cloud-based methods of sharing and storing data, these best practices for cloud DLP are particularly pressing:

  • Determine precisely what data is stored in the cloud, its purpose, and how often it needs to be accessed.
  • Define user groups so only certain information can be accessed by designated individuals.
  • Use encryption tools and other services designed to protect data in the cloud.

Enterprise DLP

Enterprise DLP solutions focus on the protection of all data across a business's entire network, for as many departments or individuals that need to access it. This type of system is typically best for large organizations. Enterprise DLP solutions often need to consider multiple security clearances, many software platforms in use, and a greater number of individuals who may accidentally play a part in a data breach. These are some general best practices for developing an enterprise DLP:

  • Centralize DLP efforts and standardize them throughout the enterprise.
  • Clearly define who gets to access which data sets and how much they can see.
  • Enforce policies consistently throughout the enterprise.

Network DLP

Network DLP solutions focus on securing methods of communication between employees, or between employees and clients. This involves the security of file transfer protocol (FTP) networks, emails, phone calls, text messages, and any other information communicated across networks in your company. Consider these solutions for network DLP:

  • Only allow certain information to be transferred on company-owned networks.
  • Use enhanced network security protocol to best protect sensitive data.
  • Encrypt access to the company network.

TipTip: Depending on your business and its circumstances, the best practices and tools for your data loss prevention strategy may vary. Consider working with a consultant to determine the best course for your business.

How to prevent data loss

As a company, you can take several steps to create an effective DLP strategy and prevent data leakage. Although some companies will need stricter protocols to protect their data, every organization should at least implement the following measures.

1. Install data loss prevention software and tools.

The right set of DLP technology and tools for your business depends on the type of data you need to protect, and there is a good chance you will need a combination of multiple tools. At the very least, your DLP system should include standard security measures like antivirus software, firewalls, and intrusion detection systems to protect against internal and external attacks. 

More advanced DLP capabilities include machine learning and artificial intelligence, honeypots, and other designated system mechanisms. You may also want to consider some form of user activity monitoring to track employee behavior and protect data access. Employee monitoring software is a great DLP tool for limiting employee website access, restricting user privileges, protecting sensitive data transmission, recording user activities and remotely deleting data. 

2. Organize documents with restricted permissions.

Proper document organization is an essential part of any DLP system. Create a system for how you will organize and store documents so that employees understand where and how to find important information. Set user restrictions on any sensitive or confidential information. 

"Users having full access to any folder, file and piece of data within a system can spell disaster if that user's access is ever compromised," Wood said. "Businesses need to have a hierarchy of permissions for their system, only allowing a few users access to that protected information."

3. Enforce strict password protocols.

Since external threats typically exploit businesses' cybersecurity weaknesses to gain unauthorized access to data, it is important for your entire organization to follow best password-protection practices as part of your DLP strategy. This is especially vital for any documents that contain sensitive or confidential data. Coach everyone in your company to use complex passwords with multifactor authentication, and they should regularly change their passwords. Some other security measures to consider are IP address permissions and time restrictions.     

4. Limit your document retention.

Proper document retention plays a key role in maintaining a secure database. Use a platform that allows you to manage your documents seamlessly and retain them only as long as necessary.

"It's a good practice to not store documents with sensitive information any longer than you have to, in order to prevent it from ever being leaked," Wood said. "Even if it's past its retention date, it's still the business's responsibility if it's ever compromised. Having strong governance also relates to ensuring that certain data remains tamper-free." 

5. Train employees on cybersecurity best practices.

You can have all the right DLP software and policies in place, but it will ultimately be useless without the proper employee education. Train your employees frequently on your DLP policy and cybersecurity best practices to avoid incidents. Additionally, perform a regular audit on your DLP policy to ensure you are up to date with security concerns and regulations. Read our guide on how to build a culture of cybersecurity at your business if you need tips.

"Regular self-audits of your system, as well as cybersecurity training for all employees, can go a long way towards preventing disastrous information leaks that can erode the trust of your customers and your standing within the business community," Wood said.

Stella Morrison contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article.

Image Credit: Pinkypills / Getty Images
Skye Schooley
Skye Schooley Staff
Skye Schooley is a staff writer at and Business News Daily, where she has written more than 200 articles on B2B-focused topics including human resources operations, management leadership, and business technology. In addition to researching and analyzing products that help business owners launch and grow their business, Skye writes on topics aimed at building better professional culture, like protecting employee privacy, managing human capital, improving communication, and fostering workplace diversity and culture.