The Ever Growing Importance of Data Residency

The importance of Data Residency - where data is stored geographically, has grown significantly with increasing regulatory demands and the widespread use of cloud and SaaS services. As data crosses borders more frequently, it often becomes subject to the laws and regulations of the country where it resides, raising compliance risks and subjecting it to the jurisdiction of more than one country.

To avoid these pitfalls, businesses should approach Data Residency thoughtfully, with a strong focus on privacy, security, and regulatory compliance.

Why Data Residency May Be an Issue

Data residency is crucial for the following reasons:

• Privacy Compliance: Different countries require specific handling of personally identifiable information (PII) and protected health information (PHI). Storing data locally helps organizations meet these privacy laws.
• Data Sovereignty: Sensitive data, like health records, is often required by law to stay within national borders to limit exposure to foreign jurisdictions.
• Export Controls: Data, especially related to national security, may face export restrictions, adding complexity to cross-border storage.
• Data Breach Laws: When data is local, organizations can more easily meet local data breach notification requirements.
• Government Contracts: Contracts with governments or security-sensitive projects frequently mandate onshore data storage.

For organizations relying on cloud services, domestic storage and security protocols can help simplify compliance. When data moves offshore, data is often subject to the laws and practices of the foreign country and corporation.

A proactive Approach to Data Residency

As regulatory requirements evolve and data flows increasingly across borders, a proactive approach to data residency can help organizations mitigate compliance risks and establish greater control over their data assets. By implementing strong data residency practices, companies not only adhere to legal standards but also reinforce trust and integrity in their digital operations.

Ways to Adhere to Data Residency Rules

• Localize Data Storage: Store data within national borders to ensure it is governed by local laws, minimizing exposure to foreign regulations.
• Implement Encryption Gateways: Use onshore encryption or tokenization gateways to secure data before transmission, retaining control even when using foreign cloud services.
• Manage Encryption Keys Locally: Keep encryption keys within the country to ensure sole access, protecting data from foreign jurisdictions and enhancing security.

An article detailing in more detail the strategies to help ensure compliance with Data Residency and improve security will be available next week. In the interim follow StratoKey for more articles.

Since 2012, StratoKey has worked with clients in healthcare, finance, cybersecurity, manufacturing, education and technology sectors to help manage data residency needs.

Learn more by downloading the StratoKey White Paper or contacting us to discuss your organization’s data residency needs.