The Hidden Risks of Neglecting Your Data Retention Policy

Learn about the risks of neglecting data retention schedules and how managed file transfer solutions can help organizations enforce retention policies.

Data is the lifeblood of modern organizations. We collect vast amounts of it from customers, employees, partners and more. But in the rush to gather data, many companies overlook a critical aspect of responsible data management—establishing and enforcing a robust data retention policy.

Failing to implement clear rules around how long data should be kept, and when it must be deleted, exposes businesses to a myriad of risks, from compliance violations and fines to reputational damage and loss of customer trust.

This piece explores industry best practices for data retention schedules, the risks of neglecting this vital issue and how managed file transfer (MFT) solutions can help organizations enforce retention policies and better safeguard sensitive data. Keep reading.

Industry Standards for Data Retention

While the specifics vary by industry and jurisdiction, some common standards and regulations provide guidance on data retention:

• GDPR (EU): The General Data Protection Regulation mandates that personal data should be kept “no longer than is necessary for the purposes for which the personal data are processed.” Exact retention periods are not specified but must be defined and justified by the data controller.
• HIPAA (US healthcare): The Health Insurance Portability and Accountability Act itself doesn’t specify a required retention period for medical records. However, it requires documentation related to privacy policies, security practices and other administrative records to be kept for at least six years.
• IRS (US tax records): The Internal Revenue Service recommends retaining tax returns and supporting documents for three to seven years depending on the specific form and situation.
• SOX (US financial records): The Sarbanes-Oxley Act stipulates a seven-year retention period for auditing records and other documents that support financial statements.
• PCI DSS (payment card data): Audit trail history must be retained for at least one year, with a minimum of three months immediately available for analysis.

While these provide general retention guidelines, ultimately every organization needs to assess the legal, regulatory and business requirements specific to their data and define appropriate retention schedules as part of a comprehensive data governance policy.

The Risks of Having No Data Retention Schedule

Neglecting to implement and enforce a proper data retention schedule exposes organizations to numerous risks:

Compliance Violations and Fines

As the regulatory landscape around data privacy continues to evolve, authorities are increasingly cracking down on non-compliance, levying hefty fines against offenders.

For example, in 2019, Germany issued its first multi-million Euro GDPR fine—a whopping €14.5 million penalty against real-estate company Deutsche Wohnen for, among other things, not having adequate data retention schedules in place and keeping personal data longer than necessary for the original purpose.

The French CNIL (data protection authority) also fined real-estate firm SERGIC €400,000 for similar GDPR violations, including failure to comply with data retention limits. The company had held on to sensitive personal documents like health records, bank details and ID card copies long after rental applications were over.

Beyond the immediate financial impact, such public compliance failures also deal a severe blow to customer trust.

Increased Risk of Data Breaches

Retaining data beyond its necessary lifetime also unnecessarily increases a company’s exposure to data breaches. Old, unused data makes an attractive target for cybercriminals trawling for personal information to steal and exploit.

High Data Storage and Maintenance Costs

Keeping excess data that no longer serves a purpose can also impact the bottom line through inflated storage, maintenance and infrastructure costs. Especially for data-heavy industries, holding onto every byte of historical data is not economically feasible or advisable.

Productivity and Data Quality Issues

On a practical level, old and outdated data can clog systems, slow down processing and hinder employees’ ability to find the current, accurate information they need to do their jobs effectively.

Outdated information also poses a data quality problem. For example, if a customer’s address or other details change, duplicate and conflicting data across systems can lead to inaccurate mailings, reporting and analytics. Regular data cleansing based on retention rules helps companies to keep data current and reliable.

Enforcing Data Retention with MFT

Establishing clear retention policies is an important first step, but organizations also need the right technologies and processes in place to enforce them. That’s where managed file transfer (MFT) solutions like Progress MOVEit software come in.

Specifically, MFT helps with data retention in several key ways:

1. Centralized Control Over Data

MFT provides IT teams with a single, centralized hub to manage and monitor the transmission of sensitive data both inside and outside the organization. Rather than having data scattered across disparate systems and insecure channels like email, FTP or consumer-grade file-sharing services, MFT consolidates file transfer activity into one secure, controlled environment.

2. Granular File Lifecycle Management

Leading MFT solutions include robust file management capabilities that allow administrators to set granular policies around how long data should be retained on the system and when it should be automatically deleted based on creation date or last use.

With MOVEit, admins can configure an automated folder cleanup schedule, allowing the system to carry out enforcement. Aged files are automatically removed according to policy without requiring manual intervention. This not only saves IT time but also reduces the risk of human error leading to expired data being forgotten and left to linger.

3. Compliant, Tamper-Evident Audit Trails

Detailed audit logs are a must-have for demonstrating compliance with both internal data retention policies and external regulations like HIPAA, GDPR, CCPA and PCI DSS. MOVEit MFT software provides an audit trail of file transfer activity in a tamper-evident database. Logs cannot be modified or deleted, providing better integrity of the audit information. In addition, MOVEit software can log events directly to SysLog management consoles for further analysis and long-term log retention as required by some compliance standards.

4. Policy-Based Access Control and DLP Integration

On top of encrypted storage and transmission, MFT allows for more granular control over exactly who can access which files, folders and features. MOVEit software empowers administrators to set and enforce user-, group- and role-based access policies for least privilege.

Additionally, MOVEit software integrates with data loss prevention (DLP) tools to automatically scan files for sensitive data. Outbound transfers can be blocked and inbound file access restricted based on DLP-set rules. This added layer of content awareness helps prevent unauthorized data exposure and policy violations.

Concluding Thoughts

Data retention is not a one-and-done activity, but an ongoing process that requires continuous enforcement and monitoring. By implementing a managed file transfer solution like Progress MOVEit software, organizations can enhance their data governance posture and reduce the manifold risks of ungoverned data sprawl.

Request a demo of MOVEit file transfer today.

The information provided on this blog does not, and is not intended to, constitute legal advice. Any reader who needs legal advice should contact their counsel to obtain advice with respect to any particular legal matter. No reader, user or browser of this content should act or refrain from acting on the basis of information herein without first seeking legal advice from counsel in their relevant jurisdiction.