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August 22, 2023
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 min read

Sensitive Data Classification

Learn how to classify sensitive data across all SaaS and Cloud Apps

Sensitive Data Classification
Calendar Icon White
August 22, 2023
Clock Icon
 min read

Sensitive Data Classification

Learn how to classify sensitive data across all SaaS and Cloud Apps


  • Data classification is crucial for protecting sensitive information in the digital age.
  • It helps with risk management, compliance, operational efficiency, and data lifecycle management.
  • Common types of sensitive data include PII, PHI, financial information, intellectual property, and business-specific data.
  • A standard classification framework includes public, internal, confidential, and restricted/secret categories.
  • Best practices for data classification include starting with a data inventory, establishing a classification policy, automating where possible, conducting regular audits and training, and tagging and labeling data.
  • Learn how Strac automatically classifies sensitive data across all SaaS and Cloud apps in minutes

A Comprehensive Guide to Sensitive Data Classification

In the digital information age, one of the prime responsibilities of IT and security leaders is to ensure the safekeeping of sensitive data. A critical step in this process is understanding and categorizing this data. Enter the world of sensitive data classification. This article will highlight the concept's importance, examples, and the broader perspective for IT and security leaders.

The Importance of Sensitive Data Classification

Data is integral to the success of any modern organization. But with great power comes great responsibility.  Data classification based on sensitivity is a must to avoid risks and reputational damage. Thus, sensitive data classification is critical in implementing modern information security practices.

  1. Risk Management: Storing data is no longer enough in the volatile digital realm. Hackers, internal leaks, and data breaches are becoming more frequent. To protect sensitive information, organizations need data sensitivity classification. This helps them understand which pieces of information need extra security measures and put safeguards in place accordingly. This helps prevent financial or reputational damages from data breaches while ensuring low-risk data isn't overprotected.
  2. Compliance: The global landscape has many data protection regulations, from GDPR in Europe to CCPA in California. Sensitive data classification is essential for any organization to ensure compliance with these regulations and avoid hefty fines. By understanding which pieces of information fall under which laws, organizations can stay up-to-date and avoid potential legal repercussions.
  3. Operational Efficiency: In the vast sea of data, data classification based on sensitivity can provide clarity and direction. Organizations can determine which data requires protection and focus on the most important information. Sensitive data classification can guide organizations, helping them make smarter decisions about their data security strategies.
  4. Data Lifecycle Management: Data isn't static; it evolves, changes and eventually becomes obsolete. Classification is key to understanding its lifecycle, helping organizations determine when data should be accessed, archived or disposed of. This ensures data relevance and helps reduce the risk of holding onto outdated information that can become a liability.a

How to Identify Different Types of Sensitive Data

Strac Sensitive Data Classification & Discovery

1. Personal Identifiable Information (PII)

PII refers to any information that can be used to identify a specific individual. This data is especially sensitive because, in the wrong hands, it can lead to identity theft or fraud. 

Examples: Name, address, Social Security Number, driver's license number, email address, and phone number.

Risks: Exposure can lead to identity theft, financial fraud, and personal harassment.

2. Protected Health Information (PHI)

PHI encompasses any health-related information that can be linked back to an individual. This data is protected under various regulations due to its sensitive nature.

Examples: Medical records, lab results, medical billing information, and health insurance details.

Risks: Unauthorized disclosure can lead to personal discrimination, insurance complications, and emotional distress.

3.HIPAA Data Elements supported by Strac

The Health Insurance Portability and Accountability Act (HIPAA) sets the standard for protecting sensitive patient data. Strac offers a secure platform that supports various data elements under HIPAA, ensuring that healthcare providers and related entities maintain the confidentiality and security of protected health information (PHI).

4. Financial Information:

This includes any data related to an individual's or organization's financial status or activities.

Examples: Credit card numbers, bank account details, transaction histories, and tax records.

Risks: Exposure can lead to financial fraud, credit score damage, and loss of assets.

5. Intellectual Property

Intellectual property refers to creations of the mind, such as inventions, literary and artistic works, designs, symbols, and names used in commerce.

Examples: Trade secrets, patents, copyrights, business methodologies, and proprietary software codes.

Risks: Unauthorized access or theft can lead to competitive disadvantages, financial losses, and damage to brand reputation.

6. Business-specific sensitive data

Information specific to a business that might not be critical to others. This category encompasses data related to operations, clientele, or business processes.

Examples: Customer lists, vendor contracts, strategic plans, and unpublished research data.

Risks: Depending on the nature of the data, exposure can lead to competitive setbacks, loss of business opportunities, and contractual breaches.

➡️For a full catalog of sensitive data elements, please see here.

Table showing HIPPA PHI Data Elements

A Framework for Effective Sensitive Data Classification

A well-designed data classification framework is a must for sensitive data discovery. It helps identify the data sensitivity and determines the protection level needed for each type. Additionally, it can streamline operational processes and ensure compliance with regulatory requirements. This article covers the basics of a standard data classification structure.

  1. Public Data:

This category includes open information that can be freely shared with the general public without any potential harm or legal consequences.Examples include press releases, marketing materials, published annual reports, and product brochures. It's important for organizations to be sure the data is accurate in order to maintain credibility with an audience.

  1. Internal Data

Organizations primarily use internal data and is not intended for public consumption. Examples include internal newsletters, employee directories, and operational procedures. Although unauthorized disclosure of this data might not cause significant harm, appropriate controls should still be implemented to ensure organizational integrity.

  1. Confidential Data

Confidential data can encompass a wide variety of sensitive information, such as business contracts, unpublished financial reports, customer lists, and proprietary research. Accessing or disclosing this data without authorization could lead to significant financial losses, legal repercussions, and reputational damage. To protect against these potential risks, organizations should implement robust security measures such as encryption and access control.

  1. Restricted/Secret Data

Restricted or secret data is the most sensitive category of data and requires the highest levels of protection. Examples include Personal Identifiable Information (PII), Protected Health Information (PHI), critical intellectual property, and classified government information. 

The unauthorized disclosure of this data can lead to severe financial, legal, and reputational damage and personal risks to individuals if it includes personal information. To ensure maximum security for this type of data, multi-layered protocols are necessary which could include advanced encryption techniques, strict access controls, and regular audits.

Access Levels Pyramid
Sensitive Data Classification Framework

Essential Best Practices to Follow When Classifying Sensitive Data

In today's digital age, where data breaches are becoming increasingly common, the importance of correctly classifying sensitive data cannot be overstated. Proper classification ensures data security and aids in regulatory compliance and efficient data management. 

Here are some essential best practices to ensure effective and accurate data classification:

Conduct a Comprehensive Data Inventory

Before classifying your data, it's important to understand the landscape of what you have. This involves identifying where the data comes from, its source, and what type of data it is. A comprehensive view of your data makes for a more efficient and accurate classification process. Additionally, this helps identify any unnecessary or obsolete data that can be discarded.

Establish a Robust Classification Policy

Organizations should develop a clear, organization-wide policy that defines the criteria for classifying data. This policy should be easily accessible and understandable for all stakeholders, to ensure consistency in classification across departments and reduce the risk of misclassification. Providing clear guidance on categorizing data will help protect an organization against security risks.

Leverage Automation Tools

Organizations handle vast amounts of data, and manual classification can be tedious and prone to errors. Many organizations rely on Data Loss Prevention (DLP) tools like Strac to automate the process. Strac detects sensitive data and takes action based on predefined policies such as redacting or masking it. Automation speeds up the classification process while reducing human error and ensuring that no data slips through the cracks.

Conduct Regular Audits and Training

Data classification should be periodically reviewed and updated to account for any changes in data or its relevance. Regular audits will ensure that data is correctly classified, while training employees on the importance of data classification and the organization's policies will help keep everyone aligned with data protection goals.

Implement Clear Tagging and Labeling

Every piece of data, once classified, should be clearly tagged or labeled according to its sensitivity level. This allows for responsible handling and usage - visual cues, metadata, and digital tags can all be used to ensure that anyone accessing the data is aware of its classification at a glance.

Strac Zendesk Redactor
Strac Zendesk Redaction

Real-Life Implementation of Data Classification

Data classification plays a pivotal role in various sectors, ensuring that sensitive information is handled with the appropriate level of care. Here's a deeper dive into its practical implementation across different industries, along with some dos and don'ts:


Patient medical records: Classified as 'Restricted' due to the sensitive Protected Health Information (PHI) they contain. Unauthorized access could lead to severe privacy violations and potential misuse.

Do: Ensure that only authorized personnel have access to these records, preferably through secure systems with multi-factor authentication.

Don't: Share or discuss patient-specific information in public forums or unsecured communication channels.

Healthcare newsletters: Typically classified as 'Public' as they contain general health tips or announcements without patient-specific details.

Do: Use these platforms to promote general health awareness.

Don't: Include any patient testimonials or stories without explicit consent.


Transaction histories: Classified as 'Confidential' as they contain detailed financial activities of clients. Unauthorized access could lead to financial fraud.

Do: Store these records in encrypted databases with regular security audits.

Don't: Send detailed transaction histories via unencrypted emails or communication channels.

Quarterly earnings reports: Classified as 'Public' since they are meant for shareholders and the general public.

Do: Ensure accuracy and transparency in these reports.

Don't: Include internal financial strategies or future projections without proper vetting.

Strac: SaaS ,Cloud & AI Data Classification and DLP

Strac automatically discovers sensitive data, classifies according to its sensitivity, and depending on remediation policy, it will automatically redact or block it.


Sensitive data classification is no longer optional. As stewards of an organization's data, IT and security leaders must champion and instill the discipline of classification, making it a standard business practice. Through regular audits, training, and the effective use of technology, businesses can fortify their data protection mechanisms, ensuring they remain competitive and compliant. Strac automatically discovers sensitive data, classifies according to its sensitivity, and depending on remediation policy, it will automatically redact or block it. This will help businesses remain compliant while also staying competitive in their industry. Book a demo today.

Founder, Strac. ex-Amazon Payments Infrastructure (Widget, API, Security) Builder for 11 years.

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