Why Data Sovereignty Matters More Than Ever in a Cloud-First World

Who’s minding your company’s data, and how? If it’s generated in one country but processed in another, then you most likely have data sovereignty concerns.  

Do you know whether your data storage and handling, including security, adhere to the laws governing your enterprise? Do you know which laws apply to your data?  

You may need to comply with regulations imposed by the jurisdiction where your business or branch is located. You may need to meet the requirements of the nation or region where it’s processed. Or both.  

Multinational organizations, in particular, must pay careful attention to their data’s journey through cloud and other digital environments, as well as to how it’s secured. Increasingly, governments are proclaiming sovereignty over all the data residing within their jurisdictional borders, no matter where it came from.  

Read on to learn more about data sovereignty, how it applies to your organization, and how to ensure compliance with the right regulations. 

What Is Data Sovereignty? 

Data, it’s said, is the new gold. Recognizing its value to businesses, people, and governments, an increasing number of nations are putting laws in place to address the question of data sovereignty. Specifically, they’re claiming the right to govern the handling, storage, and transfer of the data residing in servers in their jurisdictions, no matter where the company producing that data is located. 

As cloud use becomes the norm, blurring borders and boundaries, so does data sovereignty. Only 62 countries had data sovereignty measures in place in 2021, according to the Information Technology and Innovation Foundation. Today, more than 100 nations do. And the number is growing. 

If your enterprise uses data centers and cloud storage solutions located in another country, data sovereignty may require these centers and solutions to operate in compliance with the regulations of the country or countries where the data was generated and of the locale or locales where it’s handled and stored. Sovereignty usually applies to data storage, transmission, processing, and security. 

Savvy organizations know which laws govern their data wherever it’s located, and have clear strategies for compliance with those laws. For multinationals, staying abreast of emerging and changing requirements can be a juggling act, and even confusing.  

To avoid falling out of step with pertinent data sovereignty requirements, consider using a service such as Hornetsecurity’s 365 Permission Manager to:

• Monitor and control permissions for all your Microsoft 365 apps, 
• Ensure compliance with data privacy and residency regulations, 
• Prevent unauthorized access, and  
• Reduce compliance risks. 

Data Sovereignty vs. Data Residency: What’s the Difference?

Nations claim data sovereignty, or the right to rule over data’s handling, for a variety of reasons: to protect national interests and guard against foreign access to information; to foster individual privacy rights; and even to promote innovation and competition.  

But the underlying goal is to retain control over personal and proprietary information. Jurisdictions assert this control based on data residency, a term that refers to where the data is located. 

Let’s say your multinational organization has its headquarters in New York but also has an office in Paris. Data that originates or is collected in your New York office would have data residency in New York. Data that this office sends to the Paris office would have a European Union (EU) data residency. And if it either office transmits information to a data center in the UK, that data would have a UK data residency. Likewise, sovereignty over the data would vary depending on its data residency. 

Data residency laws set requirements for how your entity can store and process data within a jurisdiction. These laws may be designed to, among other purposes: 

• Provide residents with control over their data, 
• Enable the government to monitor residents,  
• Prevent cybercrime and identity theft, or  
• Attract and retain jobs.  

The Data Sovereignty Challenge: Keeping track of Laws & Requirements 

Keeping track of laws as well as knowing the requirements of each jurisdiction where your data resides can be confusing, not to mention challenging. The rules keep changing and vary widely from locale to locale. 

Operating under the principles of data sovereignty, some nations, including China, Russia, and India, have data localization requirements that restrict or prohibit cross-border transfers.  

China’s Personal Information Protection Law (PIPL), for instance, requires that personal and certain other data remain inside the nation’s borders unless regulatory authorities approve its transfer abroad. In other cases, controllers must comply with specific transfer requirements, including a security assessment, before sending data out of the country. 

Industry-specific data localization standards also exist, particularly in finance and healthcare. These sectors not only process the most highly sensitive personal data, but they’re also among the most targeted by attackers.  

The United Arab Emirates (UAE)’s Health Data Law requires UAE healthcare providers to store and process health data inside the country and forbids that data’s transfer out of the UAE without official approval.  

The United States has had few restrictions on data use or transmittal, but that seems to be changing. In April, the U.S. Department of Justice began enforcing a Presidential executive order, “Preventing Access to Americans’ Bulk Sensitive Personal Data and United States Government-Related Data by Countries of Concern.” This order restricts transactions involving bulk sensitive personal data or government-related data with entities in “countries of concern” including China (including Hong Kong and Macau), Cuba, Iran, North Korea, Russia and Venezuela. 

In the EU, the General Data Protection Regulation (GDPR) strictly controls the transmittal of EU residents’ personal data to servers outside Europe no matter where they’re located and levies stiff fines for breaches of the law: as much as 20 million euros or 4 percent of annual revenues. The law applies to all organizations doing business in or with the EU, regardless of where they’re located. 

Why Compliance gets even more complex in the age of cloud 

Compliance with data sovereignty and localization mandates is more important – and more difficult – than ever before as the uses of cloud environments for data processing and storage becomes the norm. Knowing where the servers are located that host your data is essential to following the laws in the jurisdictions where your entity is located and where the data resides. 

As the use of cloud and multi-cloud environments has grown, so has data sovereignty complexity. As data fans out across multiple cloud platforms, each with its own security controls and protocols, ensuring compliance with sovereignty-based laws becomes even more challenging, the Cloud Security Alliance reports.   

In attempt to follow every rule while keeping data accessible and secure, organizations may, wittingly or not, duplicate their data and keep some applications on-premises. The result: uncontrolled data in multiple storage systems.  

Knowing your data is even more critical in the age of AI. Generative AI processes and distributes data via public cloud environments from an enormous variety of sources in locations around the world, making data sovereignty compliance even more of a challenge. 

By 2027, digital sovereignty will be a prime consideration for at least 70 percent of enterprises worldwide selecting a public cloud generative AI service, Gartner predicts.  

Strategies to Stay Compliant with Data Sovereignty Laws 

To tackle the data sovereignty dilemma, organizations increasingly have data sovereignty strategies. Nearly all IT departments in the U.S. and EU – 98 percent – had or were about to implement such strategies in 2022, according to one report. These strategies include the following: 

Mapping data flows 

Only with a clear and comprehensive view of where all data goes once it leaves the organization can you know with which laws you must comply, and how to do so. 

But keeping track of where your data resides as well as of the laws governing how it’s handled can be an onerous and confusing task not only for multinational companies but for any organization handling transactions from an international clientele.  

Working with sovereignty-compliant cloud providers 

Otherwise known as “sovereign clouds,” these environments store each organization’s data (including metadata) on local servers. Data resides in compliance with local laws and is protected from foreign access. 

Choosing vendors with data centers in required regions that use proper legal frameworks 

Hornetsecurity is one. Our 365 Permission Manager helps your organization manage its information in line with data sovereignty requirements. 

Ensure that backup and disaster recovery, too, align with pertinent laws 

Backing up your data is fundamental to cybersecurity as well as resiliency in the event of a business disruption. But your backup solution must also comply with data residency and privacy requirements. 

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How Hornetsecurity Solutions Help Uphold Data Sovereignty 

In an increasingly global age, businesses must apprise themselves of which nations have data sovereignty over their information and what their laws require and stay vigilant about tracking and conforming to changes in those laws. As your business expands into more markets, this task becomes more critical and complex. 

Hornetsecurity’s 365 Permission Manager supports data sovereignty for all your transactions and interactions involving Microsoft 365 services and solutions: Teams, SharePoint, OneDrive, and Groups. This powerful solution: 

• Provides a complete overview of all your M365 permissions; 
• Prevents users from sharing sensitive information; 
• Tracks all sharing of information; 
• Provides immediate notification of violations; 
• Notifies users of violations and requests remediation; and 
• Automatically removes data and files shared in violation of policies and even restricts or removes the violating user’s access. 

For tracking your data and staying on top of sharing and transmissions, M365 Permission Manager is the premium solution for M365 users.  

Don’t let complex permissions and regulations slow your business down. Operate in confidence that you comply with all data sovereignty laws applicable to your organization.

Explore 365 Permission Manager or schedule your demo now! 

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Conclusion 

Data sovereignty is increasingly vital for organizations to ensure compliance, protect sensitive information, and navigate the complexities of global data handling in a cloud-first era. 

Laws can be strict, and penalties harsh for non-compliance, including high fines and even the suspension of business operations.  

Now, more than ever, is the time to apprise yourself of your data handling, transfer, and processing partners and protocols as well as the rules and regulations governing them.  

Fortunately, modern solutions including Hornetsecurity’s 365 Permission Manager are available to help enforce your data sovereignty requirements and keep you in compliance with the laws in your jurisdiction.