Key points

• Data classification enables organisations to identify, manage, and protect sensitive information more effectively.
• Compliance with regulations such as GDPR, HIPAA, PCI DSS, and CCPA is essential to avoid hefty fines and legal penalties.
• Consistent and ongoing data classification efforts help reduce risks, particularly those related to data breaches and unauthorised access.
• Metomic streamlines data classification through automated discovery and protection, making compliance and data security simpler to manage.

Effective data classification is crucial for compliance with data protection regulations like GDPR and HIPAA—and beyond—amid rising concerns over data breaches and privacy.

With a new data breach in the news seemingly daily, organisations are under more pressure than ever to safeguard sensitive information.

IT and security teams play a crucial role—not just in protecting data, but also in ensuring compliance with increasingly complex regulations like GDPR, HIPAA, and PCI DSS.

A big part of this challenge is knowing exactly what data you hold, where it's stored, and how it's being processed. Without this clear picture, the risk of non-compliance and potential data breaches rises dramatically.

This guide is designed to help make that easier by breaking down how effective data classification can help your organisation stay compliant, reduce risks, and maintain strong data security practices.

A brief explanation of data classification

Data classification is all about organising your data into categories, making it easier to manage and protect. Think of it like sorting books into different genres on a shelf. By understanding what types of data you have and how sensitive they are, you can apply the right security measures to keep everything safe.

It answers essential questions:

• What data do we have?
• Where is it stored?
• How is it being used?

With data breaches making headlines and privacy concerns on everyone’s mind, knowing your sensitive information is crucial.

The data classification market is projected to reach approximately $9.5 billion by 2031, reflecting how organisations are stepping up their game to comply with regulations like GDPR and HIPAA. Proper classification not only ensures compliance but also strengthens overall data governance and reduces risks.

If you want to dive deeper into data classification, check out our handy comprehensive guide to data classification.

Why do businesses need to classify data according to different compliance regulations?

Classifying data is essential for staying compliant with various regulations like GDPR, HIPAA, PCI DSS, and CCPA. Each regulation requires businesses to manage and protect data according to specific guidelines, making classification critical for understanding data sensitivity and access controls.

Failing to comply can lead to serious consequences. In fact, the average cost for organisations facing non-compliance issues is nearly three times higher than that of compliance, reaching $14.82 million. This cost encompasses not just fines, but also reputational damage and legal challenges.

By effectively classifying data, businesses not only meet regulatory requirements but also establish a strong data governance framework. This proactive approach mitigates risks and builds a culture of accountability, making data classification a priority for any organisation.

Understanding the key requirements of key compliance regulations

Navigating the maze of compliance regulations can feel daunting, but it's crucial for businesses, especially those in finance and healthcare.

Here’s a breakdown of the key requirements for some of the major regulations, including GDPR, HIPAA, PCI DSS, and CCPA. Understanding these can help organisations safeguard sensitive data and avoid hefty fines.

GDPR (General Data Protection Regulation)

GDPR is all about protecting personal data. Here are its core requirements:

• Consent: Businesses must obtain clear and affirmative consent from individuals before processing their data.
• Rights of Data Subjects: Individuals have rights, including access to their data, the right to rectification, and the right to erasure (also known as the "right to be forgotten").
• Breach Notifications: Companies must notify authorities and affected individuals within 72 hours of discovering a data breach.

For context, Meta faced the largest GDPR breach fine to date, being ordered to pay €1.2 billion for improperly transferring European users' personal data to the U.S. without adequate protections.

HIPAA (Health Insurance Portability and Accountability Act)

HIPAA protects sensitive health information in the U.S. Here’s what organisations need to know:

• Protection of Health Information: Healthcare providers must safeguard patient information against breaches.
• Access Controls: Only authorised personnel should have access to sensitive data.
• Audit Requirements: Regular audits must be conducted to ensure compliance.

Anthem experienced the largest HIPAA breach in 2018, leading to a record $16 million settlement for mishandling patient information.

PCI DSS (Payment Card Industry Data Security Standard)

For businesses handling credit card transactions, compliance with PCI DSS is essential. Key requirements include:

• Protection of Cardholder Data: Strong measures must be in place to protect cardholder information.
• Secure Storage and Processing: Data must be stored securely, with strong encryption methods used during processing.

Equifax serves as a stark reminder of what can happen when these standards aren’t followed. The company was fined $425 million after a breach affected around 45% of the U.S. population, compromising credit card details and other sensitive information.

CCPA (California Consumer Privacy Act)

The CCPA focuses on consumer rights regarding personal data. Key requirements include:

• Consumer Rights: Customers have the right to know what personal information is collected and how it’s used.
• Data Access and Deletion: Consumers can request access to their data and demand its deletion if desired.

Sephora was penalised with a $1.2 million fine for selling customer data without proper consent under CCPA regulations.

Understanding these regulations not only helps in compliance but also builds trust with customers, showing them that their data is treated with the utmost care and respect.

Best practices for data classification

Getting data classification right can make all the difference when it comes to protecting your sensitive information and staying compliant. Here are some straightforward, best practices that can help keep your data secure:

• Use scanning tools: Automating the way you identify sensitive data is a game changer. Relying on manual processes leaves room for mistakes, and the numbers show it. 86% of companies using mostly manual methods experience data breaches, compared to only 55% of companies using mostly or fully automated methods. Automating data discovery helps you stay ahead of the game and reduces your risk.
• Keep your data inventory accurate: Knowing exactly what data you have, where it’s stored, and how it’s classified is essential. Regularly updating your documentation ensures that nothing slips through the cracks. Plus, it makes compliance audits much smoother when you can easily show what’s being protected and how.
• Review and update regularly: The landscape is always changing—whether it’s new types of data or evolving regulations—so it’s important to revisit your classification process from time to time. Organisations that embrace automation are three times as likely to avoid a data breach, so keeping your methods up-to-date pays off.
• Apply security based on sensitivity: Not all data needs the same level of protection. Make sure your security measures match the classification of the data. This way, you’re focusing your efforts where they matter most. It’s worth noting that data breaches can cost up to $4.88 million on average, so prioritising the most sensitive information can save a lot of trouble.

How can Metomic help?

Metomic makes data classification and compliance a lot easier for organisations, especially when it comes to navigating the complexities of regulations like GDPR, HIPAA, and PCI DSS. Here’s how Metomic can support your business:

• Automated data classification tools: Instead of relying on time-consuming manual processes, Metomic uses AI-powered tools to automatically classify and label sensitive data. This ensures that your data is properly managed and protected without the hassle.
• Compliance tracking features: Staying compliant is tricky, but with Metomic’s real-time monitoring and detailed reports, you can easily keep track of your data security efforts and ensure you’re meeting the requirements of various regulations.
• Data discovery and management: Metomic’s automated system helps you discover and organise sensitive data across your cloud and SaaS environments, giving you a clear picture of where your data is and how it’s being used.

Getting started with Metomic

Getting started with Metomic is straightforward and can quickly strengthen your approach to data classification and compliance. Here’s how you can begin:

• Free risk assessment: Start with a free risk assessment to uncover potential vulnerabilities in your data security. Metomic can help identify risks across platforms like Google Drive, Slack, and other cloud services.
• Book a personalised demo: Alternatively, if you want to see how it works for your business, you can book a personalised demo with our security experts. They’ll guide you through how Metomic’s solutions can be tailored to fit your organisation's specific data classification and compliance needs.
• Contact us: Got questions or need further information? Reach out to our team for guidance or support in implementing a strong data classification strategy, or for any other questions.