How To Determine Appropriate Data Retention For Your Business

June 27, 2021

Data retention is essential for every business because it guides it on what records to keep and what to dispose of. Without proper data retention policies, a business faces the risk of data breaches and violating data retention laws. Here’s a look at what a data retention policy is and how to determine the one that best suits your business.

What Is A Data Retention Policy?

A data retention policy involves a set of protocols for storing records for definite periods to satisfy your business needs, legal requirements, and industry guidelines. This policy shows why a company wants to keep specific information and how to dispose of the data. The policy also includes information regarding who’s responsible for each set of data and if data that’s no longer required should be kept in archives or deleted.

Why Is A Data Retention Policy Important?

First, a data retention policy ensures your business has the right data, and only the right amount of information is stored. If you don’t back up sufficient data, recovery will not be substantial. However, backing up too much data makes the recovery process confusing and exhaustive.

Another reason to have a data retention policy is to enable you to determine how to deal with an accumulation of data. It’s crucial for your business to outline the duration it needs to retain specific data. A business should only retain information for as long as it’s required. Keeping information longer than it’s needed will take up unnecessary space and increase costs.

Lastly, a business should establish data and records management to support its main business functions, ensure privacy, and comply with legal, regulatory, and statutory obligations.

Steps To Develop A Solid Data Retention Policy

When preparing a data retention policy, you need to think about your industry, state and determine the statutes, which you must comply with. Apart from that, you should follow the following key steps.

1. Build A Data Retention Policy Development Team

The first step in creating a data retention policy is picking out a team. Don’t restrict your team to legal experts and accountants. It’s important to accept the input of diverse employees in the company.

Some of the key members you shouldn’t leave out of your policy team include:

• Employees who deal with data retention settings
• Staff who generate financial reports
• Legal counsel
• Staff charged with receiving and managing financial reports
• Departmental supervisors and managers

2. Research On The Regulations That Apply To Your Practice

Determine the regulatory authorities that govern data retention durations in your industry. Some common regulatory bodies and acts include:

• The Health Insurance Portability and Accountability Act (HIPAA). This Act relates to the healthcare sector and applies to any business involved with healthcare.
• The Sarbanes-Oxley Act or SOX. This Act has rules related to the financial industry.
• The Internal Revenue Service. This authority applies to all businesses in the U.S. and sets rules on filing tax returns, among other related tax issues.
• The Children’s Online Privacy Protection Act (COPPA). This is another act that affects businesses in the U.S.
• The EU’s General Data Protection Regulation or GDPR affects any company that transacts business with a resident of any EU member states.

To identify the relevant laws that apply to data retention policies, you need to have an accounting team and legal expert as part of your policy development team. This is because they’ll be able to analyze the laws, determine their relevance, and stay updated on any changes.

3. Define Data That Should Be Part Of Your Policy

It doesn’t matter the industry you’re involved in. There are some forms of data that should be part of your data retention policy. These include documents, customer records, emails, spreadsheets, employee records, financial reports, tax and accounting information, and student and educational data.

4. Compose Your Data Retention Policy

After determining whether to archive or delete old data, the next step is to write your policy. Each data retention policy should include five main parts. These are purpose, applicable regulations and laws, a litigation plan, and a review and update schedule.

5. Ensure Your Employees Know And Understand The Company’s Data Retention Policy

According to a report by Beta News, a study by Harris Poll established that 63% of employees don’t believe their organizations have policies affecting email retention. The employees also claimed that they didn’t know what they were if they knew about any existing data retention policies.

Ensuring your employees know what data retention policies are in place is vital to avoid such a situation. It helps to invite some employees to attend data retention policy meetings to understand the reasons for the policy and provide their input. All employees should also have a copy of the data retention policy. Finally, it’s crucial to conduct occasional training and review sessions to update everyone on any amendments or changes in the policy.

In Conclusion

A data retention policy is like a blueprint that guides a business on how to handle information. Without this blueprint, it would be difficult to sort out the important and unnecessary data. Unfortunately, this makes data backup and recovery processes painstaking.