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Data Classifications

Data classification is the process of categorizing information based on its sensitivity and potential impact if disclosed. Organizations use classification levels to establish appropriate handling procedures and protect data from unauthorized exposure.

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About this video

Data is a valuable organizational asset, and the harm caused by its exposure depends entirely on what kind of data it is. Without a shared understanding of which information is sensitive and why, employees can inadvertently release material that damages a company's competitive position, violates regulations, or exposes confidential records, not out of malice, but simply because no one defined the boundaries. Data classification addresses this gap by assigning each type of information a category that reflects its sensitivity and the consequences of unauthorized disclosure. Government frameworks offer a useful reference point. The U.S. federal government classifies data across four levels: unclassified, confidential, secret, and top secret. Unclassified does not mean publicly available; it simply indicates the data falls outside the higher tiers. Confidential data could cause damage if released, secret data could cause serious damage, and top secret data could result in exceptionally grave harm. Businesses typically adapt this logic using labels such as public, internal, confidential, and restricted, each representing a different threshold of risk and a corresponding set of handling requirements. Several factors influence where specific data lands within a classification scheme. Legal and regulatory requirements play a significant role, particularly for data types like personally identifiable information, protected health information, or educational records, where mishandling carries legal liability. Business-specific data, including trade secrets, intellectual property, financial performance data, and customer or employee records, also demands classification decisions based on the operational damage their exposure could cause. By assigning clear classification levels, organizations establish consistent procedures for how data is stored, shared, and protected, ensuring that sensitivity drives security rather than assumption.

What you'll learn

What's covered

Data Classification

Aligned to

NIST NICE
K0865 Knowledge of data classification standards and best practices
K0934 Knowledge of data classification policies and procedures
K0917 Knowledge of Personally Identifiable Information (PII) data security standards and best practices
ISC2 CISSP
2.1 Identify and classify information and assets
2.2 Establish information and asset handling requirements
CompTIA Security+
3.3 Compare and contrast concepts and strategies to protect data
NIST 800-53
RA-2 Security Categorization
CompTIA SecurityX
1.4 Explain how privacy and data sensitivity impact security and business requirements

Key terms

Data Classification
The process of organizing and labeling data based on its sensitivity or confidentiality level to inform access and handling policies.
Confidentiality
The principle that information is accessible only to those authorized to access it.
Asset
Any resource of value to an organization, including hardware, software, data, and personnel.
Data Loss Prevention
DLP
A set of tools and processes designed to detect and prevent unauthorized access, use, or transmission of sensitive data.
Personally Identifiable Information
PII
Personally Identifiable Information is any data that can be used alone or in combination to identify, contact, or locate an individual, requiring protection under privacy laws and organizational security policies.
Protected Health Information
PHI
Protected Health Information is individually identifiable health data covered under HIPAA that requires specific administrative, physical, and technical safeguards to protect its confidentiality, integrity, and availability.
Intellectual Property
Creations of the mind owned by an organization, such as trade secrets, patents, and proprietary processes, that provide competitive advantage.
Data Handling Procedures
The policies and practices governing how data of a given classification level is stored, accessed, transmitted, and disposed of.

Topics

Data Classification Information Security Data Handling Sensitive Data Security Policy Data Governance

Transcript

Data is an asset to the company, and exposure of certain data can cause damage to the company. But not all data is created equal — some data is more sensitive than other data.

A Scenario

Let's generate a little scenario here. This is Susan, and Susan has access to a report on what the company is going to be doing in the future, what product they're going to offer in the future. She's excited about this product, so what she does is she takes this report and posts it on social media.

The problem with this is that it lets all of the customers know what the company is going to be doing in the future. This is really problematic, because it could take away some of the competitive advantage that this company has. The management didn't want Susan to release this report on social media. When they go and talk to Susan, all she can say is, "I didn't really know that this was sensitive information, that we didn't want to put this out there. I thought we would want to brag about the company." So she wasn't doing anything wrong, but it caused some damage to the company.

That's where data classifications come in. By understanding what classification data has, we understand what we could do with this document, how we could distribute this document. Data classification is an important part of making sure we all understand how to handle certain information within the company.

Government Classification Levels

A good example of data classification is taking a look at the US government and what they have. They have four different categories: unclassified, confidential, secret and top secret. They all have to do with the sensitivity of the data.

  • Unclassified doesn't mean that it can be released to the public. It just means that it's not confidential, secret or top secret, but it still is restricted information.
  • Confidential means that it could cause damage if that information were to get out.
  • Secret means it could cause some serious damage.
  • Top secret is exceptionally grave damage.

Business Data Classifications

There isn't a classification level that's the official classification level for businesses, but there is some general terminology that's used quite a bit when it comes to classifying different documents within a business. Some of those could be public, private, sensitive, confidential, critical, restricted — and there's probably a few other words out there that we could add to this list.

Here's a business data classification, though, that is a little more prevalent out there.

  • First level, you have public. This just means that it can be freely disclosed to the public — things that you would post on a website, that would be public information.
  • Then there's internal information. This is stuff that really is unlikely to cause much damage at all, but really is meant for internal communication within the company, not really meant to go outside the company.
  • Then there's confidential information. This could have an impact on operations if it's released, so what they want to do is protect this confidential information with an elevated sense of security.
  • Then we have restricted information. Restricted is stuff that could be damaging to the company if it's released, so it has a heightened level of criticality here.

Determining How Critical Information Is

One question is, how would we determine how critical this information is? One might be, how is it classified from laws and regulations? Because depending on how it's classified from laws and regulations, there might be a different impact if that information were to get out, or lost, or stolen. For instance, personally identifiable information is something that's really critical that we keep safe, so that could be maybe on the far end of the spectrum where it's restricted data.

Another thing that can make a big impact is what kind of data it is. Here's some personal data types: whether it's PII information, PHI information, financial or educational records.

Different classifications could also vary based off of business types. For instance, we have trade secrets, things that if they were to get out we would lose our competitive advantage; or legal information; or intellectual property; or financial information on how the company is doing; or customer information; or employee information. All of this could have an impact, and so we might want to classify this data.

Really, what this helps us to do is determine at what level we are going to protect this data and how we are going to handle this data. It gives us different handling procedures.

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