How to Keep Your Company’s Data Out of the Wrong Hands

It wasn’t long ago that protecting your company’s data meant locking your desk drawer and reminding the lobby security guard to check the doors during his evening rounds. Today, however, our concerns extend beyond just the security guard or an enterprising thief.

In addition to foreign hackers, internal leaks from disgruntled employees exposing sensitive data and accidental exposure can all lead to opportunities for blackmail and extortion. Do you recall the executive meeting where the marketing team shared your latest product research? Ordering a written transcript for executives in the West Coast office seemed like a good idea. Are you certain that the transcription company you hired can ensure that the audio file or completed transcription hasn’t fallen into the wrong hands?

The burden of safeguarding valuable data weighs heavily on every entrepreneur. Fortunately, there are straightforward steps you and your employees can take to minimize the risk of data theft.

Keep sensitive data local

If you own or operate a U.S.-based company, keeping sensitive data within U.S. borders is a wise decision. When data is transferred to another country, there is a significant risk of losing the legal protections provided under U.S. laws.

The location of your company data determines who can legally access or subpoena it. Where a company’s data centers are physically located is typically not a random decision. Most companies strategically choose such locations based on factors that may include regulatory requirements, proximity to users, data volume and the provider’s global infrastructure.

If your business handles sensitive information such as legal, health or personal information, U.S.-only storage and processing significantly reduces exposure to overseas exploitation — including blackmail and coercion risks that can extend to employees, courts and law enforcement — while improving your legal recourse and compliance posture.

In my industry, some companies claim to be based in the U.S. merely because they lease office space or employ a handful of “executives.” However, many of these companies are actually owned by foreign entities and often rely on inexpensive overseas labor. Even if a company is U.S.-based, what matters is where they store your data.

Issues can arise when audio or video files contain sensitive legal or medical information. U.S. and other countries’ laws dictate how companies must protect this type of data. The Health Insurance Portability and Accountability Act (HIPAA) safeguards patient health information handled by U.S. entities. The Act also requires that such data be protected when transferred outside the country. The European Union’s General Data Protection Regulation (GDPR) also limits transferring personal data outside the European Economic Area (EEA) to ensure sensitive data stays protected.

Complications can arise when U.S. laws conflict with those of foreign nations. These disputes have led to significant legal battles and prolonged international diplomatic negotiations.

The best and safest way to ensure sensitive data remains protected is to keep it within U.S. borders. Let’s review several ways to protect your company’s sensitive data.

Who can access your company data?

Protecting company data involves understanding both its location and who has access to it. Evaluating internal access is crucial, but it’s equally important to understand the data security protocols of your vendors.

Start with a data audit checklist for both your organization and your vendors. Do you know exactly where the data is stored, who has access to it, and at what levels?

Many of us are familiar with U.S. government security clearances from watching drama and crime thrillers. The lowest level of security clearance is “Confidential.” Individuals assigned this clearance undergo a basic background check.

The next level is “Secret.” Individuals with this security clearance undergo a more stringent background check because disclosure at this level could cause significant damage.

The highest level is “Top Secret,” which is granted to a select group of individuals who undergo an extensive background examination that may take months or even years to complete. Revealing Top Secret information could result in long-term damage to military, business or intelligence operations.

While the CIA-style information may be intriguing, there are two key considerations companies should keep in mind when designing their data security plans.

• The three security clearances outlined above are designed to separate access to specific information.

• Each level is formulated on a “need-to-know basis.”

Your primary focus should be on determining which employees within your organization require access to particular information or data. For instance, does the Vice President of Sales at a pharmaceutical company need access to the latest clinical research results for a new drug? Probably not. On the other hand, a junior lab technician who is inputting data or assisting with experiments likely does need that access. Conversely, the lab technician does not need access to projected sales figures after the drug’s approval.

Take a close look at precisely who needs access to what data and for what reasons. Assign access accordingly and restrictively. If an individual or team no longer requires access to certain data, it is important to limit or remove that access.

Vendor security

Hold your vendors and outside consultants to the same standards you uphold internally. A good starting point is to implement a non-disclosure agreement (NDA). Have your attorney or legal department draft NDAs for outside parties who need access to internal information.

It is important to ask the right questions before engaging a vendor. Just as owners and executive staff invest time in preparing key questions when interviewing for important staff positions, preparing questions for potential vendors can help you evade data security pitfalls. Here are a few examples:

• Can you contractually guarantee that all data storage and processing will occur on U.S. servers, even when using AI?

• Where are your subprocessors and support locations based?

• Is there any external access to these locations from outside the U.S.?

• Do you ever export logs, backups, crash dumps or model telemetry to overseas locations?

• Do any individuals outside the U.S. review transferred data (even snippets) for quality assurance or labeling purposes?

• Can we utilize a U.S.-pinned region with zero retention and no‑train AI?

• Do you have a breach playbook and a U.S.‑based incident response?

• Will you sign our Data Processing Agreement (DPA) with U.S.-only clauses and liquidated damages?

Granted, some of the questions above may be excessive. Depending on your data security needs, they provide a solid foundation for identifying vendor weaknesses. Additionally, be aware of offshore vendors, lax compliance standards and outdated security protocols.

Advantages and disadvantages of AI data protection tools

AI has significantly impacted data security in various ways. On the positive side, AI enhances data security through advanced threat detection, which helps reduce incident response times. However, there are also challenges, such as AI-generated malware attacks and the risk of sensitive data leakage from shadow AI tools.

Let’s focus on the benefits of AI in threat detection. In addition to the previously mentioned advantages, AI tools can analyze patterns from both past and current attacks, enabling a better understanding of how to prevent future attempts to breach data systems.

Another valuable application of AI involves machine learning (ML), which can identify vulnerabilities in code that might go unnoticed during manual inspections. Developing proactive tactics is often more effective than relying solely on defensive strategies.

AI data security is a complex and complicated subject. However, whether it’s someone from your IT team or an outside consultant, developing a comprehensive data security plan should move to the top of your to-do list today.

It wasn’t long ago that protecting your company’s data meant locking your desk drawer and reminding the lobby security guard to check the doors during his evening rounds. Today, however, our concerns extend beyond just the security guard or an enterprising thief.

In addition to foreign hackers, internal leaks from disgruntled employees exposing sensitive data and accidental exposure can all lead to opportunities for blackmail and extortion. Do you recall the executive meeting where the marketing team shared your latest product research? Ordering a written transcript for executives in the West Coast office seemed like a good idea. Are you certain that the transcription company you hired can ensure that the audio file or completed transcription hasn’t fallen into the wrong hands?