A data retention policy – also referred to as a records retention policy – is a set procedure that outlines how information and data should be stored for operational needs and regulatory compliance. Essentially, it’s a framework that ensures all employees handle, maintain, and store data correctly and in accordance with applicable laws.
Generally, a data retention policy outlines why maintaining the information in a specific matter is essential. Then, it continues by listing any relevant guidelines, protocols, and procedures. That can include where specific types of data should reside, encryptions standards, access controls, and more.
Creating an effective data retention policy is essential for practically any company. While it seems complex, building a comprehensive one isn’t overly challenging if you follow the right steps. Here’s an in-depth look at data retention policies, including why they’re essential, how to create one, relevant best practices, and more.
Why Having a Strong Data Retention Policy Is Essential
A company’s data retention policy is a critical component of its overall data management strategy. Often, organizations collect information with surprising speed, and it’s difficult to properly handle the data if there aren’t formal protocols in place.
Additionally, many companies have regulatory requirements they need to meet regarding their data. This can include maintaining specific records for a certain amount of time and ensuring they’re properly safeguarded. Since failing to comply with regulations can come with stiff penalties, including fines, criminal charges, and damage to the organization’s reputation, having a plan to ensure compliance is a must.
A robust data retention policy also helps companies ensure that data isn’t held for longer than necessary. Specific types of information aren’t potentially relevant over the entire life of a business. Without addressing data deletion, organizations could spend a significant sum securing the required storage space and maintaining security protocols to store data indefinitely. With a data retention policy in place, the appropriate personnel know when various records can be safely purged, freeing up room for new data.
The Core Components of a Data Retention Policy
Generally speaking, a data retention policy addresses very specific points, ensuring they’re properly defined. In most cases, that includes:
- What data is subject to the retention policy
- Why following the data retention policy is essential
- The format data should be kept in while active or archived
- How long the data must be retained
- When archiving should occur vs. when deletion should occur
- Who has the required authority to archive or delete data
- How data will be reviewed to assess compliance
- Processes to follow when the policy is violated
In some cases, companies may need to cover other components based on their industry or unique operational needs. However, the list above is typically applicable to any organization, making it a solid starting point.
How to Create a Strong Data Retention Policy
1. Choose a Responsible Team
Before creating a data retention policy, you need to gather a team of subject-matter experts that can help guide and shape the policy. Usually, this will involve cross-departmental collaboration. Having the right legal, technical, and operational expertise is essential. Otherwise, the resulting policy may miss critical components.
2. Review Any Regulatory Requirements
At a minimum, a data retention policy must meet any regulatory requirements that apply to your industry. Make sure to review any relevant laws or mandates, gathering details regarding how long specific types of data must be retained and any requirements relating to how it can be stored.
Here are some of the laws and regulations that may apply to an organization:
- Health Insurance Portability and Accountability Act (HIPAA)
- Fair Labor Standards Act (FLSA)
- Federal Information Security Management Act (FISMA)
- The International Regularly Framework for Banks (Basel III)
- Sarbanes-Oxley Act (SOX)
- Payment Card Industry Data Security Standard (PCI-DSS)
For companies operating in Europe or engaging with European customers, the General Data Protection Regulation (GDPR) may also apply. Additionally, companies may be subject to state-level requirements, as well as industry-specific regulations not listed above.
Along the way, make sure you examine any differences between paper records and digital ones. In some cases, the rules may vary slightly. Additionally, you may or may not be able to circumvent paper record requirements by digitizing the documents, so you need to see which rules apply before you proceed.
3. Outline Operational Requirements
From an operational standpoint, you need to determine how long various data types provide value. Essentially, you want to define how long the data will remain active, allowing you to create timelines for future archiving.
It’s also wise to examine where the data needs to reside while it’s active, as well as if removing it from one system while maintaining it in another is a necessity. There are instances where older information is relevant in one capacity but not others. As a result, having a plan for removing it from specific systems while keeping it in others is wise.
4. Locate and Classify Existing Data
During the creation process, you also need to spend time locating and classifying all existing data. By doing so, you can get a better idea of how much information is governed by specific retention requirements.
Often, this can make planning storage and security measures easier, as you can centralize records relating to individual data types to improve efficiency. Plus, you can ensure that information that isn’t subject to the same requirements isn’t mixed together, which can make certain processes more challenging.
5. Prepare for Audits and Enforcement
Having a strategy for audits and enforcement in advance ensures you can take proper action once the new data retention policy goes into effect. Additionally, this approach is more proactive, as you’re already prepared to ensure compliance and take corrective steps should they become necessary.
In some cases, you’ll need to have separate audit and enforcement strategies for different data types. This is particularly true of regulatory requirements that are more stringent for some kinds of information than others. It allows you to focus the bulk of your efforts in areas where non-compliance comes with the biggest consequences while ensuring that other areas aren’t accidentally neglected or overlooked.
6. Create a Review and Revision Schedule
Often, it’s best to view your data retention policy as a living document. Technology shifts over time, which could result in new data types that need addressing. Similarly, regulatory requirements and business needs can change, which may make your current processes insufficient or inefficient.
How often you need to review and potentially revise your data retention policy may depend on your industry. However, it’s best to assume that an annual review is necessary, at a minimum. Then, you can create caveats relating to the introduction of new laws and regulations, ensuring you’re ready to take action if a new mandate comes into effect before your next regularly scheduled review.
7. Write the Data Retention Policy
After taking the steps above, you can typically draft your first version of the data retention policy. Once it’s written, make sure it’s reviewed by the entire cross-functional creation team. Then, if necessary, consult key stakeholders in different business areas to gather insights or potential recommendations pertinent to their operational area.
The goal here is to create and then refine your data retention policy. While you don’t want to involve so many stakeholders as to make the process cumbersome, it’s wise to bring some fresh eyes into the mix. That way, if anything critical was accidentally overlooked, corrections can be made before the policy is formally implemented.
8. Secure Necessary Approvals
With the final version in hand, it’s time to secure any necessary approvals. Again, precisely what’s needed here will vary from one organization to the next. However, it usually involves key department heads or other members of the leadership team and may include some other critical stakeholders.
9. Implement Any Needed Technologies
After finalizing the data retention policy, it’s time to address the technology side of the equation. Make sure any processes, systems, or applications that are necessary to ensure proper storage and archiving are in place. Additionally, do a security review to make sure that information is correctly secured based on the data types.
If you need to centralize or move any existing data, coordinate with stakeholders and technology team members to create plans for the transition. Often, this is far more cumbersome than one would expect, so it’s wise to treat each shift as an individual project, increasing the odds that it all moves forward smoothly.
10. Provide Training to Employees
With the new technologies and procedures in place, it’s time to educate staff members. Simply publishing the policy and announcing that it’s in effect often isn’t enough to ensure compliance. Instead, you need to formally train your workforce, ensuring employees know how they need to handle data that are related to their role.
Since employees may not all interact with the same data types, it’s wise to create separate training programs that are role or department-specific. This increases overall relevance, as the information provided is focused on the employee’s function. However, touch on the broader policy, too.
Additionally, have a plan for training incoming hires. You’ll also want one for employees who transition into new roles, particularly if they change departments or take on responsibilities that involve interacting with different data types than they managed previously.
In many cases, you should add an annual refresher course, as well. This ensures that employees are updated on any changes relating to new technologies, data types, or regulatory requirements, making long-term compliance more likely.
Data Retention Policy Best Practices
While the process above largely covers the steps needed to create an effective data retention policy, it may not be the ideal solution for every organization. Ultimately, companies have unique needs and requirements. As a result, they may need to adjust how they create a data retention policy to ensure the outcome aligns with their goals, objectives, and requirements.
By embracing various best practices, it’s easier to adapt your strategy to your organization. Here’s a look at some of the most critical data retention policy best practices.
Review Regulatory and Business Requirements
When you’re developing a data retention policy, you need to examine the issue from two perspectives. First, you need to factor in any regulatory requirements. That ensures that your policy will align with legal mandates, making compliance easier to achieve.
Second, you need to examine your overall business requirements. These allow you to take operational needs into consideration, making it easier to develop a comprehensive policy that goes beyond simple regulatory requirements.
Adjust Procedures for Different Data Types
In many cases, treating all data equally isn’t overly efficient or cost-effective. The sensitivity of various types of data can vary, and different regulations or operational requirements may apply to different kinds of information.
As a result, it’s wise to have different protocols for each data type. That allows you to ensure that the information is treated correctly while avoiding unnecessary spending that can result from subjecting all data to the longest durations or highest security standards.
Have a Formal Process for Archiving
At times, data may lose operational relevance before it’s eligible for deletion based on regulatory requirements. In this case, having a formal archiving process is a must. It allows information to be removed from the active data pool while ensuring it’s kept intact for the required period, upping operational efficiency while maintaining compliance.
Create a Formal and a Simplified Version
In many cases, companies need a formal data retention policy to satisfy regulatory requirements. However, the way those are written can be incredibly complex and might be challenging for employees to understand.
As a result, it’s wise to create a simplified version for internal use. By using language that’s easier for everyone to follow, you increase understanding and make processes easier to follow.
Informing customers, suppliers, and other organizations regarding how their information is stored and retained is critical. It allows them to understand the requirements, along with any safeguards that are in place to protect sensitive data. Additionally, it shows that your organization values regulatory compliance, particularly for laws that make such disclosures mandatory.
Reviewing and Updating Your Data Retention Policy
As mentioned above, regularly reviewing and updating your data retention policy is often essential. However, while it may seem like small tweaks or minor additions can cover any required changes, it’s best to give your data retention a full review at least once a year.
Check every line to ensure it still aligns with regulatory requirements and business needs. If a point is no longer relevant, remove it to simplify your policy. Then, determine how recent changes – including new data types, technologies, or laws – impact what’s required. Review every section to ensure it addresses those changes and create a new, updated draft.
Once you have a draft, go through the review and approval cycles once more. After the draft is finalized, make sure to implement any new technologies and update the employee training. That ensures that, when the new data retention policy is published, everyone will have the tools and knowledge necessary to remain compliant.