Information Center

Safe and Secure: The Importance of Data Encryption

Business success comes down to two things: how you capitalize on opportunities and how you manage risks. It's easy to focus on the former and ignore the latter, which can have detrimental effects.

And this is especially true with cybersecurity. As digital threats increase in magnitude and severity, you must take precautions to safeguard your business against data breaches and loss. Such events come with disastrous effects, including financial losses, reputational harm, and a loss of customer trust.

According to a 2022 IBM report*, 83% of companies do not know whether a breach will happen but when. The report further indicates that the average data breach cost for U.S. companies is $9.44 million. This is $5.09 million higher than the global average.

With so much at risk, enhancing your cybersecurity posture should be one of your top priorities. In this regard, adopting data encryption is one of the best measures you can take. This involves using encryption algorithms to convert data into incomprehensible forms preventing unauthorized access.

Read on to learn how you can begin encrypting data to safeguard your consumers' and intellectual data.

What Is Data Encryption?

Data encryption is the process of converting data into an unreadable format that cannot be accessed without decrypting it. To decrypt it, the recipient must have a cipher or decryption key. By encrypting data, you turn it into a secret code or language that only the intended recipient can decode to understand the message.

How Does Data Encryption Work?

Data encryption uses algorithms to convert plain text data into random, unintelligible formats. The process involves three key elements: a plaintext message, an encryption algorithm, and a secret key.

The plaintext message is the original data that needs to be protected. It is then scrambled by the encryption algorithm and converted into ciphertext. After encrypted, only individuals with access to the secret key (a series of characters used to decrypt and decode ciphertext) can decode and understand the message.

Therefore, even if someone accesses or intercepts the data, they cannot decrypt it without the key.

Data encryption is essential for businesses wishing to safeguard their sensitive data from online dangers. It ensures that the encrypted data is unintelligible and useless to attackers even in the event of breach.

Common Encryption Algorithm Types

You can use various encryption algorithms to protect your data depending on your needs and preferences. Here are the most common ones:

  • Advanced Encryption Standard (AES): A symmetric encryption algorithm, AES uses the same key for both encryption and decryption. AES offers a high degree of security and efficiency, making it a popular choice among top institutions, including the U.S. government.
  • Triple Data Encryption Standard (3DES): Another symmetric encryption technique, 3DES uses three keys rather than AES’s one. It is a more complicated algorithm than AES, but it is often employed in business because it is compatible with earlier encryption standards.
  • Rivest-Shamir-Adleman (RSA): As an asymmetric encryption algorithm, RSA uses two separate keys for encryption and decryption. It's primarily used to secure communications channels in the e-commerce and banking sectors. 

Why Is Data Encryption Important for Businesses?

Embracing technology to deliver better services more efficiently and to connect with customers can give you a significant competitive advantage. However, it also increases your exposure to malicious attacks by cybercriminals. Some of the common threats you may face include:

  • Phishing Attacks: Phishing attacks are a sort of social engineering attack in which a perpetrator assumes the identity of a reliable organization to deceive victims into disclosing personal information such as usernames, passwords, and credit card numbers.
  • Malware: This is malicious software created with the intent to harm, interfere with, or steal data from computer systems. Malware can appear in various formats, such as Trojan horses, worms, and viruses.
  • Insider Threats: Insider threats are dangers posed by people working for an organization, such as partners, contractors, or employees, who have access to private data and may misuse it for their benefit or to harm the company.

As you can imagine, data encryption can help protect your organization from such threats. Since the data is converted into an unreadable format, cybercriminals cannot use it even if they access it.

Data encryption is crucial to safeguard sensitive data and reduce the dangers of cyberattacks. By implementing robust encryption standards, you can ensure your data is safe and secure even in the face of changing cyber threats.

Benefits of Data Encryption

Data encryption provide benefit ranging from enhancing operations and security compliance to improving your bottom line.

Protecting Data from Cyber Threats

As with other brands, your organization generates tons of valuable data daily via operations and customer interactions. This is why cybercriminals constantly work on new ways to exploit business networks to steal such data.

By using robust encryption, you can significantly reduce the risk of data leaks. Encryption makes sensitive data unreadable and requires a key to decipher. Without the key, an attacker cannot use or comprehend encrypted data. This makes it difficult for hackers to steal or misuse sensitive data.

Data encryption also protects against insider attacks. Corporations can lessen the danger of insiders abusing or leaking sensitive data by restricting access and encrypting it.

All in all, encrypting data helps companies protect their most precious asset by preventing breaches and limiting the risk should a breach occur.

Limiting Access to Sensitive Information

While having a sense of privacy by ensuring only authorized people can access data is essential, not all data is equally sensitive. For instance, proprietary material or consumer financial and health information data is highly sensitive. If such data were exposed, the effects would be far greater than a leak on Corporate Social Responsibility (CSR) projects.

In addition, you’ll reduce human-error data breaches by restricting access to sensitive data. This is because even if an employee sends data to the wrong person, the recipient cannot access it.

Improving Compliance with Data Privacy Regulations

With increasing data privacy regulations, corporations must now prioritize privacy compliance. Regulations such as the EU’s General Data Protection Regulation (GDPR) and the U.S.’s HIPAA require companies to protect sensitive data.

Data encryption simplifies compliance and ensures organizations satisfy regulations. This can avert costly non-compliance fines and maintain the company's brand and consumer confidence.

Furthermore, data encryption could be a competitive advantage. For instance, a company that prioritizes data security and protects sensitive information may attract more consumers.

Increasing Customer Trust

The biggest casualties of data breaches are consumers. When their data is exposed, they can become victims of identity theft or extortion, in addition to a violation of their privacy. As a result, people are becoming more cautious about the brands who store their data. 

Along with enhancing your security posture, encrypting data can help you build confidence with your customers. Furthermore, your commitment to data security will become a competitive edge as you'll attract more customers.

This is especially so in sectors such as banking and healthcare, who maintain sensitive data.

Challenges of Data Encryption

The benefits of encrypting data can help you take your business to a whole new level. However, the process will not necessarily be smooth as there are challenges with encrypting data. These range from handling encryption keys to ensuring system compatibility.

Implementation Costs

The first hurdle you’ll encounter when implementing data encryption is the costs involved. And beyond being expensive, the process will also be time-consuming, depending on the complexity of your data infrastructure.

To successfully install and maintain encryption procedures, you may need to spend on IT staff, training programs, and encryption software and hardware.

While data encryption may be expensive, it’s essential to consider the cost of a data breach and the long-term benefits of protecting sensitive data. Corporations may evaluate data encryption costs and advantages by creating a complete plan and assessing the return on investment.

Protocol Complexity

By design, encryption protocols are complex, more so for non-technical users. Furthermore, you may need different encryption protocols for various data and systems, adding a compatibility challenge.

As such, to build and maintain encryption systems, you may need to hire IT staff or third-party experts. The good thing with this is that it will also help you keep up with encryption standards and practices. As such, you’ll be able to adjust to threats before you’re compromised.

Due to the complexity of encryption protocols, adopting them will be challenging. Nonetheless, you must prioritize data security and effective encryption practices. This should involve regularly updating your encryption procedure, investing in continuing training and education, and engaging with specialists.

Difficulty in Key Management

An important part of the success of encrypting data is the key that allows recipients to access data. Each member may have a private key, depending on your encryption method. This means you’ll need to develop and distribute many keys.

There's also the challenge of managing numerous keys and ensuring they're only delivered to authorized users. Otherwise, if the keys are compromised or lost, it can cause downtime, financial loss, and even reputation damage.

You need secure key management systems and specialist encryption key managers to avoid this. In addition, implement rules and processes to securely produce and distribute encryption keys and restrict access to them.

Despite the challenges with key management, it plays a vital role in the success of your data encryption efforts. Therefore, ensure you get it right from the word go and build from there.

Securing the Encryption Process

Encryption enhances your data security, as only authorized personnel can access data. However, your efforts to enhance data security may be unsuccessful if the encryption process is compromised. This can happen if the encryption algorithms and keys are hacked.

Therefore, to prevent such an occurrence, ensure you use industry-standard encryption techniques and routinely audit your encryption procedures to find and fix problems.

More importantly, establish encryption policies and regularly update encryption to keep them secure and effective.

Implementing Data Encryption

Although implementing data encryption can be a difficult and complex process, it is crucial to safeguard your sensitive data from online threats.

Here are some actions to take when putting data encryption into practice:

  • Conduct a risk analysis: Before deploying data encryption, perform a thorough risk analysis to determine the most sensitive information in your company and the most likely cyber threats. This will enable you to choose the encryption methods that best suit your needs.
  • Establish a policy for data encryption: You must create a thorough data encryption strategy that details the encryption methods to be used, who will have access to the encryption keys, and how the keys will be handled and protected after you've determined which data needs to be encrypted.
  • Educate your staff: Data encryption is only useful if your staff knows how to utilize it correctly. Make sure to give all staff members who will be in charge of managing and encrypting sensitive information thorough training.
  • Continually review your encryption procedures: Regular audits can help find flaws or vulnerabilities in your encryption methods and guarantee the security of your sensitive data.

While adopting the ideal encryption standards is great, you must also avoid the common pitfalls for your efforts to be successful. These include:

  • Not encrypting all sensitive data
  • Using subpar encryption algorithms or protocols
  • Failing to rotate or update encryption keys regularly
  • Storing encryption keys in unprotected places
  • Allowing unauthorized access to encryption keys

By following these steps and practices, you can ensure your data encryption procedures successfully defend your sensitive information from online attacks and avoid frequent hazards.

Compliance Regulations

Even if it may not be possible to encrypt all your data, you can focus on the most sensitive informationThis is especially important for financial services, healthcare, and government agencies that handle a lot of sensitive data. These industries have strict compliance and access regulations that organizations are better able to achieve by encrypting data. You must abide by data privacy laws to avoid fines and keep customers' confidence. Therefore, understanding the regulations that apply to data encryption in corporate settings is essential for firms. They include:

  • General Data Protection Regulation (GDPR) imposes obligations on organizations that deal with the personal data of EU citizens. To secure customer information, businesses must use data protection methods like encryption.
  • California Consumer Privacy Act (CCPA) affects organizations that manage the personal data of California residents. It mandates that businesses use appropriate security measures, such as encryption, to safeguard customer data.
  • Health Insurance Portability and Accountability Act (HIPAA) is a U.S. policy applies to organizations that deal with patient data. To secure electronic protected health information (ePHI), organizations must put encryption and other security measures into place.

Penalties for Non-Compliance

Data encryption regulations can have harsh repercussions, including fines, legal action, and reputational harm. Infractions of the GDPR, for instance, may result in fines of up to €20 million, or 4% of annual worldwide revenue, whichever is larger. Up to $7,500 in fines may be assessed for each CCPA violation.

Best Practices for Compliance with Data Encryption Regulations

In your efforts to comply with data regulations, observe the following practices for the best results:

  • Conduct a risk analysis to determine which areas need encryption
  • Make use of reliable key management procedures and encryption methods
  • Use access controls to restrict access to confidential information
  • Consistently examine and revise encryption guidelines
  • Educate staff members on the best data encryption procedures


You can't afford to leave your data security and protections to chance. The process does not have to be stressful or involve costly avoidable mistakes. This is why having the right partner with the expertise, experience, and technology to support your data encryption needs is important.

Get in touch with us today to see how we can help you better protect your data.


Veritas customers include 95% of the Fortune 100, and NetBackup™ is the #1 choice for enterprises looking to protect large amounts of data.

Learn how Veritas keeps your data fully protected across virtual, physical, cloud and legacy workloads with Data Protection Services for Enterprise Businesses.


Frequently Asked Questions

Encrypt any data that is sensitive, confidential, or subject to data privacy laws. This includes any information that may endanger the organization or its clients if it falls into the wrong hands, such as personally identifiable information (PII), financial data, intellectual property, and other data.

Cybercriminals find accessing or stealing data challenging because encryption transforms it into an unreadable format. Without the encryption key, even if an attacker can access encrypted material, they won't be able to read or use it.

Data breaches can have significant repercussions, including financial losses, reputational harm, and legal repercussions. Breaches can also lead to a decrease in consumer loyalty and confidence, which can be hard to rebuild.

The cost of implementing data encryption varies depending on the size and complexity of your IT infrastructure and the amount of encryption you need. However, regarding potential data breaches and associated costs, the cost of not using encryption may be much higher.

* Report - "Cost of a data breach 2022"