Data Classification: A Key Component to Effective Cyber Risk Management


Data classification is the process of organizing data into categories so that it can be effectively used and protected. Data classification helps businesses identify what data they possess, how sensitive it is to the organization, where it is stored, and how it is being used. It gives the organization a framework for managing and securing their information assets, and is critically important for risk management, regulatory compliance, and overall data security.


Every organization will have different criteria and labels for data classification, but typically data is divided into four classifications:

  • Restricted/Confidential- Data that has the most limited access and requires a high degree of integrity. This is typically data that will do the most damage to the organization if it is disclosed. This includes employee medical records, litigation data, or strategic plans.

  • Private- Data that is less restricted within the company, but that still might cause damage if disclosed to the wrong parties. This includes Personally Identifiable Information (PII) and financial information.

  • Proprietary- Data that is disclosed outside the company on a limited basis or contains information that could reduce the company's competitive advantage. This includes Intellectual Property (IP), market research, and other trade secrets.

  • Public- Data that is intended for distribution outside of the company or is available to the general public. This could be anything from data used for marketing to the number of employees in the company.


Data Classification is a critical component of cybersecurity risk management, as it allows for specific security responses based on the type of data being retrieved. When determining which security protocols to implement, businesses should always look at the sensitivity of the data that they are protecting, and defend it accordingly. Data classification is a key component of effective cyber risk management, as data that is less sensitive can be exposed to greater risks than more sensitive information. Classification allows businesses to take larger risks with some data, while still maintaining the integrity of their overall security posture. However, it is only after clearly defining their risks that businesses can make well-informed decisions about the best ways to protect each type of information. Instead of protecting all information equally, limited security resources should be dedicated to protecting the most sensitive data.


Part of risk management is controlling access to sensitive information. Classifying data makes it possible to restrict access to sensitive data for servers, applications, or people that don’t need it, and to enable access for those that do. It also allows different security protocols to be put in place for different types of data. This makes it more difficult for threat actors to find or gain access to sensitive data on your network, and lets businesses focus cybersecurity spending on their most sensitive information.

Restricting access not only by sensitivity, but also by department can create even more security around sensitive documents. The head of HR likely does not need access to the production department’s restricted files, but without classification and segmentation, it is difficult to limit that access. Ultimately, businesses must find a balance between confidentiality and availability. Some employees do need access to sensitive information, but proper data classification and segmentation can help companies control who has access to what.


It is impossible to protect what you do not know you have. Without an awareness of which information assets present the greatest risks, companies cannot make informed decisions about their cybersecurity practices or policies. By limiting access to sensitive information, and putting more cybersecurity focus on the data which has the potential to do the most harm, businesses greatly mitigate their cybersecurity risks. Even if an employee is phished or a network is infiltrated, proper classification, segmentation, and protection can safeguard a business’ most valuable data.


Are you ready to take your cybersecurity seriously? Bluestone Analytics can walk you through the data classification process, and help you make informed decisions about your information security practices. If you want to defend your data, contact us to schedule a complimentary consultation.