What You Need to Know About Data Retention Policy

Data is an essential digital asset for organisations, and its volume is increasing daily. Organisations require a data retention policy to manage the ever-growing data.

A data retention strategy or policy is a documented and agreed-upon set of rules that defines how an organisation should retain data. An effective policy also complies with regulatory policies and laws.

It explains how to retain data, the retention period, and dispose of data if it is no longer required. It also clarifies the format of records and data and how to know which data to retain.

Data retention policies also specify what to do with the data after the retention period expires. Should you move it to secondary or additional storage or delete it? Will data be retained on existing or new external hard disk drives, a cloud storage facility, offsite or onsite data storage centres, or a Network-Attached Server (NAS)?

This approach is helpful because no organisation can arrange financial capacity to retain data forever.

Every organisation can tweak its data retention policy over time, keeping the goals in mind. However, these tweaks also need to align with data retention laws. To comply, companies also use a data retention policy template.

Such templates state what type of records they will retain and for how long. They have granular data details for their emails, contracts, electronic files, invoices, and computer programs. They have details for reporting policy violations, records management, employee responsibility, disposable information, and data storage and destruction mechanisms. 

It becomes important because every organisation has to comply with its regulatory bodies. For instance, any publicly traded company in the United States must retain its data according to the SOX data retention policy, an acronym for the Sarbanes-Oxley Act. 

Likewise, healthcare firms must design retention policies according to the Health Insurance Portability and Accountability Act (HIPAA). Even companies with credit card payment options need to comply with specific regulations.

Such companies must align their policies per the Payment Card Industry Data Security Standard (PCI DSS).

Retention laws can be international, meaning every company worldwide must comply with them or region-based. For instance, any firm that stores the personal information of EU citizens needs to comply with the General Data Protection Regulation (GDPR) data retention policy. 

With a good data retention and destruction policy, companies can destroy the data they do not need. A data retention policy will help them manage their storage capacity. With unwanted data gone, they can effectively manage essential data. 

With detailed guidelines for destroying unwanted data, the company can eliminate outdated and duplicate files, improve the system, and expedite the search.

A company’s worth and credibility increase with a data retention policy. Many laws require this, and it can also prevent penalties and legal complexities. 

A data retention policy lets customers know how well you manage their data and how mature the company is. It tells them how much the company cares about their satisfaction, elevating the reputation and client base. 

An effective policy ensures that the data management processes are simplified without confusion and uncertainties. It eliminates the potential chaos that occurs when managing a large data set.

There are relentless security threats, especially stealing financial data and confidential emails. Plus, any disaster or outage can come at any moment, bringing havoc for the company. Companies can get back on track quickly with an established backup frequency of mission-critical data.

For a policy to be effective, there are certain aspects that it needs to address. These include, but are not limited to, the following.

• To whom the data is concerned.

• What is the need for retaining data?

• What are the relevant documents and reference guides to craft a retention policy?

• What laws and regulations does the company need to comply with?

• How do companies safeguard data during the retention period?

• Strategy of data preservation.

• When and how to destroy data?

Effective retention policies keep a strict eye, especially on personal information. Every personal data stored in the database, including emails, financial records, documents, and image stock, must be retained for a certain period.

A properly vetted plan must exist to decide when to destroy the information. A single mistake can lead to years-long court trials and loss of time and money. 

The next critical aspect is to define where to store retention data and how frequently to take backups. It defines where to store the data. For instance, on cloud servers, existing hard drives with a dedicated directory, or remote storage centres. 

Additionally, it mentions what data needs to be stored. Is there any need to store databases and computer applications? What about emails and financial records that are decades old? Lastly, what should companies do with images and personal information about people?

Lastly, it provides guidelines on the frequency of backups. The following are key questions to ask when creating an effective backup routine.

• What is the desired Recovery Point Objective (RPO)? This measurement indicates how much data loss a company can tolerate without significant drawbacks.

• Is the data at risk of being lost? How do we handle the risk?

• When will the backup routine run? Will it be a cold or hot backup?

• How do you backup files that are changing daily?

The last ingredient is how a company can ensure that employees properly practice the guidelines of a file retention policy. In the end, employees are the ones who create and dispose of data.

A good policy will persuade companies to arrange data retention training for newcomers. Before onboarding, the company representatives should explain which data is essential and how to manage files daily.

A good policy also defines the process for monitoring and auditing compliance with a data retention policy. Companies can conduct scheduled audits to determine if the data is appropriately retained and disposed of according to the policy guidelines.

We have seen what a retention policy is and its key ingredients so far. However, there are multiple retention policies, each with its requirements.

A data retention policy entails retaining data so the company can use it for its needs. For instance, a company might retain ten years of data to increase marketing efficiency. They might only keep it for analysis so they can devise strategies accordingly, and after that, they might dispose of the data. 

The company also retains data when it is under litigation and investigation. If a legal case is pending against the company, it must retain every necessary document until it clears.

A data retention policy is when businesses must keep data to meet legal requirements and industry regulations. For example, companies that hold the personal data of EU citizens must comply with GDPR data retention requirements.

Data management, especially for increasing data, is complex. A policy with complicated language and confusing statements can worsen the situation. The policy document should be concise and easy to understand.

In many companies, multiple teams and departments use the same data set. Sometimes, other companies that run joint ventures also use it. That is why it is crucial to have at least one individual from every team and company to provide feedback on the policy.

We must decide the data retention period according to the various data types. For instance, a retail business does not need to retain years of search history.

However, keeping the shipping address is necessary because this might be useful in the future, especially during marketing campaigns.

Data retention should not be complex, entirely human-driven, and agitatedly scheduled.  Innovative companies use technology solutions like data management software to tackle their data efficiently and automatically. There are many online tools that you must start using. 

A common mistake is not including minor files or data. A data retention policy might result in ignorance and not backing up the data. That same minor data might be necessary as a building block to a more extensive solution. Hence, we need to account for every piece of data.

Sometimes, you need to change your data retention policies. There can be other reasons besides legal matters. For instance, the industry standard for data retention has changed. Companies must align their policies with the newer ones in such a scenario.

The following questions can help decide whether to change the existing policies. 

• Is the current policy helpful in terms of a product liability lawsuit?

• Is the policy in line with the latest industry standards?

• Will the existing retention and purging policy help in the case of tax record audits?

• Does the current policy consider data recovery for lost data due to viruses, human errors, server crashes, and deliberate sabotages?

• Does the current policy adequately regulate employee data retention? Such data will be helpful if an employee files a lawsuit against the company.                      

A data retention policy is critical for organisations to manage their ever-growing data volumes. It ensures legal compliance, optimises storage usage, and streamlines data management processes. 

By following best practices like clear communication, user involvement, and data classification, organisations can create an effective data retention policy that fosters client trust, safeguards sensitive information, and positions them for success in the digital age.