Guide: Data Classification

Why You Need a Data Classification Policy and How to Make Sure it is Up to Date?

As important as knowing what data you have and who has access to it to protect your organization’s information, data classification is a critical component of information security. Essentially, if your company does not properly classify its data, it will not be able to protect its data in the future effectively.

In this article, you will learn the following:

What is Data Classification?

Data Classification refers to the methods and technologies used to categorize data and make it easier to store, manage, and secure. Data classification entails knowing what kinds of data you have and what you are doing with it.


Every company should define which types of data belong in which categories. A common hierarchy of sensitivity commonly gets included in the categories:


  • Protected
  • Sensitive
  • Confidential
  • Public


Although each organization’s categories are titled and defined differently, several common types, such as those listed above, are frequently used.


Nevertheless, having the categories and knowing what type of information each category contains is crucial in determining how you manage that data, which generally gets done through an Information Classification Policy.

Three Types of Data Classification

There are three main types of data classification, and you will explore each of these three types of data classifications below.

Content-based Classification

This method probes and interprets data utilizing deep inspection for sensitive, personal, and confidential data before assigning the appropriate classification label.

Context-based Classification

This method looks at files based on metadata rather than content, for example:


  • The site of data creation or modification
  • The source of the data
  • The way the information gets put to use. Data Classification Policy healthcare or financial applications, for example.

User-based Classification

This method is similar to manual human-generated classification, in which a person chooses how to categorize the data. Personal discretion and knowledge of data are heavily reliant on user-based categories or the standards of who is responsible for data classification.

What is a Data Classification Policy?

A data classification policy is primarily concerned with information management to guarantee that sensitive information gets handled appropriately concerning the hazard it poses to a business.


It also considers how this obtained data is used and structured within an organization to allow authorized workers to get the relevant information at the right time while also guaranteeing that only those who are authorized can view or access information.


Any organization’s database contains data with varying sensitivity levels; some data is more sensitive than others.


In general, a data classification policy template contains the following sections:


  • Purpose: A data classification policy protects data created, stored, processed, or transmitted within an organization. It forms the basis for developing specific policies, procedures, and controls to safeguard sensitive data.
  • Scope: The scope defines whether it applies to all information systems inside a company or whether there are any exceptions.
  • Roles and Responsibilities: Data classification roles and responsibilities describe who will be responsible for drafting the policy, training stakeholders on security best practices, identifying threats to information, implementing controls and maintaining control updates, and monitoring policy compliance.
  • Data Classification Categories: This section describes the categories of data into which you will classify all data and the exact sorts of data that will fall into each category of data.

The Importance of a Data Classification Policy

The main benefit of information classification is that it helps your company implement appropriate controls based on specified category data. Keep in mind that your controls usually come at a price. You do not necessarily require the same controls for different types of data.


Thus, applying data classification guidelines can save you time and money by allowing you to focus on what is important instead of wasting time and effort putting in place additional restrictions.

Why Keep Your Data Classification Policies Up-to-Data

The only thing more important than establishing an information asset classification policy is maintaining that data classification template up to date.


Modifying your data classification policy is crucial to meeting your team’s data management goals. Every data-related decision made within the company should be based on accurate, up-to-date data classification status. Successful businesses stay on top of internal developments, such as implementing new technological systems and external regulatory obligations and updating their data classification table accordingly.


They also ensure that all team members who work with systems and data are completely aware of what is in the most recent edition of their data classification policy.

Example of a Data Classification Policy

A data classification policy can simplify life in a variety of business operations. Be it meeting a compliance audit, completing a merger, or defending your organization in court. A data classification policy can be beneficial.


Consider this example:


Regulators want verification that your healthcare tech firm is following HIPAA Data Classification regulations when storing sensitive patient data.


Accordingly, your team can rapidly demonstrate that all personal customer information is classed as sensitive and receives the greatest security protection, thanks to your data classification policy.


All information is filed in a policy-compliant manner and is easily available to regulatory auditors. Consequently, regulators can see proof that you have taken information security seriously, and your organization avoids the financial fines and reputational damage that come with HIPAA non-compliance.


A data classification policy allows a corporation to show how it classifies sensitive medical information and protects it to the best level possible. Without classification, businesses struggle to handle their most sensitive data effectively. They also tend to overinvest in security technologies and procedures while underinvesting in others, putting themselves and their clients at a disadvantage.


Finally, data classification is a vital initial step in ensuring the security of your data. Defining your classifications correctly and implementing the appropriate controls can spell the difference between having to file a breach and not having to report one.

Data Classification with Satori

Satori provides a different approach to data classification. With Satori, data is continuously discovered and classified, instead of performing ad-hoc scans. 

Learn more:

Last updated on

May 30, 2022

The information provided in this article and elsewhere on this website is meant purely for educational discussion and contains only general information about legal, commercial and other matters. It is not legal advice and should not be treated as such. Information on this website may not constitute the most up-to-date legal or other information. The information in this article is provided “as is” without any representations or warranties, express or implied. We make no representations or warranties in relation to the information in this article and all liability with respect to actions taken or not taken based on the contents of this article are hereby expressly disclaimed. You must not rely on the information in this article as an alternative to legal advice from your attorney or other professional legal services provider. If you have any specific questions about any legal matter you should consult your attorney or other professional legal services provider. This article may contain links to other third-party websites. Such links are only for the convenience of the reader, user or browser; we do not recommend or endorse the contents of any third-party sites.