Data PrivacyData Retention Policy and its Role in Protecting Sensitive Data

October 12, 20220


Data is integral to every aspect of our lives.  On a daily basis, we gather and exchange a huge amount of data. Subsequently, businesses gather and process the personal data of their consumers in bulk for their business purposes. However, it is important to understand how much data a business can store or retain, and to what extent.

Data retention is one such practice that can help organizations in storing the right amount of data. The practise of keeping data and records for a predetermined period of time is known as data retention or record retention. A corporation may need to store data for a number of reasons, such as maintaining accurate financial records, adhering to industry compliance, ensuring that data is easily accessible for business requirements and legal proceedings, and many more.

Data has evolved into a crucial resource for almost all companies over the past decade, particularly those in the business-to-consumer (hereinafter referred to as “B2C”) sectors. However, choosing to store data is not a choice to be made lightly. For contemporary enterprises, data preservation is essential.

Data pertaining to customers must be stored, but storing such data indefinitely is not an option. Businesses must decide how long they can store data in their systems and remove it once such a time period has passed or the purpose has been fulfilled. Policies for data retention are essential for safeguarding the security of consumer data and guaranteeing adherence to organisational standards and sector rules.


A data retention policy outlines how long a business can keep various types of data for operational or regulatory compliance purposes and how it will dispose off that data after the stipulated duration.

A business must consider how to structure and store the data so it can be searched for and retrieved later while developing a data retention strategy. Additionally, it must also be considered as to how to dispose off the data that is no longer needed.

Some companies believe that utilizing a template for a data retention policy is advantageous since it provides structure. A thorough data retention policy outlines the reasons for maintaining particular data as well as what to do with it when it is about to be removed or deleted.

The arrangement of documents and data, retention period, and storage methods or devices used to retain them should all be specified in a data retention policy. Usually, these components are based on guidelines set by the industry. However, a data retention policy should ideally have the following structure:

1. Essential components of a data retention policy.

2. The purpose for collecting and maintaining sensitive data, such as credit card data, medical records, or other Personally Identifiable Information (hereinafter referred to as “PII”), should be mentioned explicitly in the policy. Numerous businesses gather various sensitive data types, making them subject to a variety of data privacy laws.

3. A business must list its retention obligations based on the data it collects. This can contain the requisite data retention time, security safeguards in place to safeguard the data while it is kept, guidelines for data destruction once the retention period has ended, and the steps the firm takes to enforce policies, maintain compliance, and respond to data breaches.

4. Data restoration from backups is a frequent breach response plan, and a data retention policy must specify standards for these procedures as well, including the frequency at which they occur and how they are retained.

Since a backup entails moving sensitive data to a backup storage space in case a breach affects it or completely destroys it, legal regulations still apply. The degree of sensitivity of the data will determine the backup cycle, which might range from daily to yearly, if there is a risk of data loss, etc. Whatever the consumer opts for must be stated in the policy. Daily and weekly backups should be kept far less frequently than monthly or yearly backups.


Information is produced and stored electronically on computers in the corporate world of today. As a result, the significance of developing and executing a document retention policy increases in complexity yet becomes crucial to preventing potential legal disputes in the future.

One of the most crucial justifications for creating and maintaining a strong data retention policy is legal requirements. Simply said, any document pertaining to business operations may include details that might be useful to the company in the event of a potential legal issue.

Both paper documentation and information in electronic form are the cruces that feed the workings of any organization. However, storing such a large amount of digital information is a difficult task for the organization and therefore, the need for a data retention policy arises to manage information more efficiently.

In information management, routinely monitoring the data retention policy gives a company the ability to get rid of duplicate and out-of-date files. Duplicate and obsolete data should be removed to speed up searches and improve user experience.

An efficient data retention policy can increase the amount of storage that is accessible, by which organisation will have more space for new data and files.  The migration of older data to the cloud while removing duplicates might be an easy and efficient way to manage data.  With reduced storage costs and enhanced speed, the entire process saves time and money overall.


A company’s data retention policy governs how the data is stored for compliance or regulatory purposes as well as how it is disposed of when its purpose has been fulfilled.

In the modern era, information is developed and maintained digitally. Hence, it becomes extremely important to protect the data from any potential breach or unwarranted exposure to any third party. Data retention means that data is still expanding, both in its original form and in backups. Therefore, data retention policies are important as it is one of the methods to reduce the quantity of data and maintain the same efficiently.

Data retention policy provides systematic guidelines to retain and dispose off the data received or created in the course of business. A data retention policy is a vital tool as it is important to ensure that consumer data, employee communications, and other data are accessible and secure.

-Team AMLEGALS, assisted by Ms. Pratishtha Vaidya (Intern)

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