What Are Best Practices for Data Security for Sensitive Data?

Why Securing Sensitive Data Is a Business Imperative

Sensitive data fuels a plethora of businesses in 2025, from customer engagement to financial reporting. And countless organizations touch sensitive customer data, such as Protected Health Information (PHI) to Personally Identifiable Information (PII), either by creating, retaining, transmitting, or maintaining it. But if exposed, this kind of sensitive data can damage brand reputation, trigger regulatory penalties, and disrupt business operations.

Despite this risk, many organizations still struggle with basic data hygiene, including weak access controls, poor encryption, and vendor exposure.

This blog outlines the essential practices for protecting sensitive data — and why the risk extends far beyond your internal perimeter.

What Counts as Sensitive Data?

Sensitive data includes any information that could harm individuals or organizations if exposed. Common categories include:

• Personally Identifiable Information (PII): Names, addresses, Social Security numbers
• Protected Health Information (PHI): Medical records, insurance details
• Financial Data: Credit card numbers, bank account information
• Access Credentials: Usernames, passwords, API tokens
• Intellectual Property (IP): Source code, trade secrets
• Regulated Records: Data covered by GDPR, HIPAA, PCI DSS, or GLBA

Each data type carries unique compliance obligations and breach consequences.

Core Best Practices for Securing Sensitive Data

Strong data security starts with understanding what data you hold and how it flows across your environment.

1. Classify and Inventory Your Data

You can’t protect what you can’t see. Start by:

• Identifying sensitive data types
• Tagging data based on risk level
• Mapping where data resides across systems, cloud apps, and endpoints

Use automated discovery tools to find sensitive data in shadow IT and third-party environments.

2. Enforce Role-Based Access Controls

Limit access based on job function. Apply the principle of least privilege by:

• Granting only essential access
• Reviewing permissions regularly, such as quarterly
• Deactivating dormant accounts

Identity federation and centralized access logs can simplify enforcement and auditing.

3. Encrypt Data in Transit and at Rest

Encryption ensures data is unreadable if stolen. Some standards your organization could consider adopting include:

• AES-256 for data at rest
• TLS 1.3 or higher for data in transit
• Full disk encryption for devices
• Hardware Security Modules (HSMs) for key management

Most regulatory frameworks (such as HIPAA and PCI DSS) support or require encryption.

4. Define and Enforce Retention Policies

Holding data longer than needed increases breach risk. If it’s not necessary to retain, consider purging it. Use retention schedules and automated deletion tools. Audit backups to avoid unintentional data sprawl.

Third-Party and Cloud Risk

Sensitive data often flows beyond your firewall—to SaaS platforms, cloud storage, and vendor tools. But these environments are increasingly breached.

More than one-third of breaches now originate in third-party systems, according to SecurityScorecard’s 2025 Global Third-Party Breach Report. Common exposures include:

• Cloud products and services
• File transfer tools
• Foreign subsidiaries
• Customer Relationship Management (CRM) and communication services

The research showed that 41.4% of ransomware attacks involved a third-party breach component. Ransomware groups increasingly steal sensitive data before encrypting systems and then use the threat of public disclosure to pressure victims to pay massive ransom demands. This double-extortion model means even having encrypted backups may not prevent reputational damage.

Best practices for managing third-party risks include adding data security clauses in vendor contracts and requiring evidence of encryption, access controls, and other cyber hygiene metrics. Establishing breach notification procedures with vendors can also be a helpful step.

SecurityScorecard’s Supply Chain Detection and Response (SCDR) solution can help detect vendor-side data leaks, weak configurations, and breach indicators continuously. To stay abreast of leaked sensitive data, SecurityScorecard produces 68 terabytes of leaked data from data breaches—including usernames, passwords, Social Security Numbers, payment card information, addresses, IPs, and more.

Layered Defenses for Data Protection

Encryption alone isn’t enough to protect sensitive data from prying eyes. Security teams should consider controls across identity, endpoints, and networks. While each control plays a role, their strength lies in their coordination:

Data Loss Prevention (DLP)

DLP can help prevent unauthorized sharing of sensitive data by:

• Monitoring file transfers, email, and USB usage
• Blocking risky actions in real time
• Integrating with identity providers to enforce policy

Multi-Factor Authentication (MFA)

MFA adds a second layer of assurance for data access. Required by many major compliance frameworks, including HIPAA, according to updates arriving in 2025.

Endpoint Detection and Response (EDR)

EDR monitors endpoints for malicious activity. EDR tools detect malware targeting sensitive files and can help contain exfiltration attempts.

Network Segmentation

Network segmentation can reduce lateral movement. Isolate systems that handle HR, finance, or legal data from general-use networks using VLANs and firewalls.

Continuous Monitoring: Detecting Breach Indicators Early

Even with strong controls, no environment is breach-proof. Continuous monitoring and early detection shortens attacker dwell time and limits damage.

Key monitoring strategies include:

• Crawl dark web forums and ransomware sites for leaked credentials
• Track unusual access patterns or data transfers
• Flag unusual API calls or outbound connections

SecurityScorecard’s sinkhole processes over 2 billion infection signals daily, helping organizations detect compromise quickly.

Aligning with Industry Frameworks

Adopting a well-known security framework can help your security team ensure you meet regulatory and industry expectations. Consider:

• NIST 800-53 / NIST Cybersecurity Framework: U.S. government and critical infrastructure
• ISO/IEC 27001: International security standard
• HIPAA Security Rule: U.S. healthcare sector
• PCI DSS 4.0: Payment processors and financial entities
• GLBA Safeguards Rule: Financial services and lending institutions

These standards all emphasize encryption, access control, vendor oversight, and incident response.

Final Thoughts

Sensitive data protection is about compliance, but it is also a business continuity issue. Attackers exploit weak access policies, vendor weaknesses, and cloud misconfigurations to steal data—and often extort victims afterward. Not only can your organization face major financial and compliance issues, but your reputation can also suffer in the face of a sensitive data breach or leak that could lead to continued negative repercussions for your business.

Protecting sensitive data requires visibility, discipline, and urgency. As reliance on third parties continues to grow in 2025, security teams must shift from annual reviews to continuous monitoring—and treat third-party systems with the same scrutiny as internal ones.

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