Retaining data is more than information storage. It’s also knowing what data to keep, for how long, and why. It is vital to regulatory compliance, security, and operational efficiency, helping organizations minimize risk, control costs, and make smarter business decisions.
What Is Data Retention?
Data retention is the policies and processes an organization sets up to determine how long it will keep different types of data. It includes the data’s entire lifecycle, from its creation or collection to its eventual archiving or disposal. Its primary goals are balancing business needs, legal and regulatory requirements, cost-effectiveness, and risk management.
While the terms “data retention” and “database retention’ are often used interchangeably, database retention is a subset of broader data retention.
- Database retention focuses on the data stored within databases. It considers factors like database performance, storage capacity, and the database’s specific purposes.
- Data retention includes all forms of organizational data, including documents, emails, multimedia files, and physical records.
All database retention is data retention, but not all data retention involves databases.
Data Retention’s Role in Data Governance
Well-defined data retention policies and procedures are essential to effective data governance. They establish specific preservation periods for different data categories and align with legal and regulatory obligations, business requirements, and risk mitigation strategies. Effective data retention ensures data is available when needed for operational purposes, audits, and legal discovery. It also prevents the accumulation of outdated or unnecessary information.
Data retention and data classification go hand-in-hand in an organization’s data governance strategy. Data assets must be identified and categorized based on sensitivity, regulatory mandates, and business value. For instance, financial entities must comply with regulations like Dodd-Frank that mandate specific retention periods for transaction records and client communications. In the e-commerce sector, customer browsing history might have a shorter retention period based on marketing analytics needs and privacy considerations like the EU’s GDPR.
A good data retention strategy supports several data governance objections, as it:
- Ensures compliance with evolving legal and regulatory landscapes.
- Minimizes potential liabilities related to retaining irrelevant or excessive data.
- Reduces storage costs.
- Enhances data quality by keeping it current and accurate.
It also provides a clear framework for the secure and defensible disposal of data when its retention period expires. In the long run, data retention is not a peripheral activity; it’s an integral element underpinning a data governance program’s integrity, security, and compliance.
Importance of Data Retention in Modern Organizations
Organizations have long recognized the importance of data retention. Pre-digital retention focused on physical records and was driven primarily by business needs and legal and regulatory compliance. While security was a concern, today’s sophisticated threats and strict privacy regulations were not a major worry.
Today, retaining data is a key part of keeping a business safe, helping it bounce back quickly from cyber incidents, and reducing data leak damage. Holding onto the right information also helps companies learn and grow. They can spot trends, figure out what customers want, and work smarter.
Manual retention processes are increasingly insufficient for organizations with large data volumes spread across multiple platforms. Automated policy enforcement is becoming essential to ensure consistent application of retention rules regardless of where data resides.
This makes modern data retention a critical strategic function that balances security risks, legal obligations, and privacy concerns. Organizations must take a much more proactive, nuanced, and sophisticated approach to data retention than they did before. Technology capabilities and extracting data’s value are equally important considerations in shaping data retention policies.
While retention policies ensure essential data is available when needed, they must also address the significant risks of keeping data too long. Extending data retention periods beyond what’s necessary—especially for sensitive information—creates substantial liability and security exposure. Overretention significantly increases breach impact, as attackers gain access to larger data volumes. Organizations have faced devastating consequences when breaches exposed sensitive information they had no business reason or legal obligation to still possess.
Additionally, excessive retention complicates compliance with data subject rights under privacy regulations, increases discovery costs in litigation, and can violate minimization principles in laws like GDPR. Proper deletion is as crucial as proper retention for comprehensive risk management.
What is a Data Retention Policy?
A data retention policy dictates what information to keep, for how long, where to store it, and how to securely dispose of it when the data retention period expires. It also helps organizations use their data wisely and strategically.
While policies differ from organization to organization, they must meet or exceed all applicable data retention laws. For example, publicly traded US companies must establish Payment Card Industry Data Security Standards (PCI DSS) data retention policies. Healthcare providers must develop policies that adhere to HIPAA. Businesses that process or store personal information of EU citizens must comply with the GDPR. And under the California Consumer Privacy Act (CCPA) and California Privacy Rights Act (CPRA), organizations must disclose their data retention policies and the specific categories of information they collect, use, and retain. They must also provide consumers with certain rights, including the right to request deletion of their personal information.
Key Components of an Effective Data Retention Policy
A good data retention policy ensures information is handled responsibly, efficiently, and in compliance with applicable rules. The right policy reduces risk, supports operational needs, and helps maintain data quality.
Every data retention policy should include these key components.
Types of Data to Be Retained
Data classification sorts data into categories like personal information, financial records, operational logs, and intellectual property. Each category is evaluated based on its sensitivity, regulatory obligations, and business value. This classification guides the retention schedule and helps determine each data type’s security measures.
Defined Retention Periods
Each data category should have a clearly defined retention timeline that aligns with internal business needs and legal, regulatory, and industry-specific requirements. For instance, financial records are typically retained for seven years for compliance purposes. Internal emails, on the other hand, might only need to be kept for one year.
Storage Location and Access Controls
Where data is stored and who can access it is just as important as how long it’s kept. Policies should specify whether data is stored on-premises, in the cloud, or in hybrid environments. Access controls should be tailored to the data type’s sensitivity and ensure that only authorized personnel can retrieve, modify, or delete information. Policy-based access controls that automatically adapt as data moves between systems ensure consistent protection regardless of storage location while eliminating security gaps from manual permission updates.
Deletion and Disposal Protocols
Detailed procedures for secure deletion and disposal define what should be done when data reaches the end of its retention period. Permanent removal methods that prevent recovery, such as digital wiping or physical destruction, should be used to reduce the risk of breaches and ensure privacy law compliance.
Roles and Responsibilities
Everyone in an organization should understand who is responsible for what when it comes to data retention. This includes designating individuals or teams to oversee implementation, monitor compliance, keep records, and manage exceptions or legal holds. Clearly defined roles and responsibilities ensure accountability and prevent oversight or confusion in the data retention process. They also facilitate efficient data-related communication and collaboration when questions or issues arise.
Review and Update Procedures
Data retention policies are not set-it-and-forget-it documents. Regular reviews ensure organizations keep up with changes in regulations, business operations, and emerging technologies. Updating policies ensures retention practices remain relevant, effective, and legally compliant.
Regulatory and Legal Requirements for Data Retention
The regulatory and legal requirements for data retention are complex and vary significantly based on factors like industry and country.
Relevant industry examples include:
- Healthcare. In the US, HIPAA requires providers to retain protected health information (PHI) for at least six years from its creation or the last day it was in effect, whichever is later. Some states impose longer retention periods.
- Financial services. Publicly traded companies in the US must comply with the Sarbanes-Oxley Act (SOX). The law requires them to retain audit work papers and other relevant financial records for seven years.
- Telecommunications. Some countries have specific data retention laws for telecommunications data. For instance, Australia’s Telecommunications (Interception and Access) Amendment (Data Retention) Act 2015 requires telecommunication providers to retain metadata for two years.
- Payment card industry. The PCI Data Security Standard (PCI DSS) requires merchants handling credit card information to retain transaction logs and other related data for at least one year.
Data retention laws can also be highly country-specific. The GDPR, for example, emphasizes data minimization and requires organizations to keep personal data only as long as necessary for the purposes for which it was processed. While it doesn’t specify exact retention periods, organizations must establish and adhere to retention schedules and be able to justify them.
In the US, various federal and state laws dictate retention periods for different types of records. To date, there is no single, comprehensive federal data retention law. China’s Cybersecurity Law and other regulations impose data localization and retention requirements, particularly for critical information infrastructure operators.
Organizations with complex infrastructure face additional challenges implementing consistent retention policies across different platforms. Using a unified governance layer that enforces policies regardless of where data resides eliminates manual reconciliation and reduces compliance risks.
Failure to comply with data retention regulations can lead to severe consequences, including financial penalties and fines, legal actions, reputational damage, loss of customer trust, operational disruptions, and criminal charges. These risks make it crucial for organizations to thoroughly understand the data retention requirements applicable to their industry and the countries in which they operate.
