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What Does Data Sovereignty Mean? An Explanation and Best Practices to Follow

One of your company’s chief concerns as one that handles or otherwise maintains data on behalf of users is ensuring that your actions relating to that data are lawful. Data sovereignty is one way you maintain that lawfulness. The term refers to applying jurisdictional, national, or even continent-wide laws to your users’ data. Thus, we get a simplified meaning of data sovereignty—the term defines how your organisation handles data based on territorial laws.

Definition At a Glance

Data sovereignty refers to the principle that data is subject to the laws and regulations of the territory where it is stored or processed. Organisations must comply with local laws regarding the collection, management, protection, and processing of data, with responsibility resting on them to address security and privacy concerns based on the users’ location, especially when operating across multiple jurisdictions.

What Is Data Sovereignty?

Data sovereignty asserts that any data your organisation maintains is subject to the laws and regulations of the territory in which you are located. Those laws outline your responsibilities for the data that you collect. They will instruct you how to legally collect that data and regulate its management and ongoing protection as you store and process it.

On an organisational level, the responsibility for data sovereignty rests firmly on your shoulders. So, what does data sovereignty mean in the context of your business? It means you are responsible for addressing security challenges and user privacy concerns at the organisational level concerning your users’ territory or state of residency. It is here where sovereignty becomes complex.

Multinational businesses may operate in multiple territories, such as the European Union (EU) and the United States. “Multiple territories” means users from several different countries. Each of those territories has data sovereignty laws – such as the EU’s GDPR – for which you must account within your organisation. Thus, multinational businesses must develop multiple layers of compliance to ensure that their data is protected appropriately.

Why Is Data Sovereignty Important?

Data sovereignty matters so much because its proper (or improper) application significantly impacts your business regarding data protection and compliance. Take the UK’s introduction of the Government Security Classification (GSC) in 2014 as an example. This law brought with it a trio of data classifications intended to help your organisation determine what type of data it held – “OFFICIAL,” “SECRET,” and “TOP SECRET.”

However, we then get into the region of “OFFICIAL-SENSITIVE.” Though not an actual classification, “OFFICIAL-SENSITIVE” is more akin to a sub-classification of the “OFFICIAL” classification. It applies only in certain circumstances (when handling official data that is also sensitive), and it adds an extra complication to your organisation’s application for the GSC.

It is these types of classifications and sub-classifications that can trip your organisation up. What is the OFFICIAL-SENSITIVE meaning? is not a complete classification under the GSC but you must still be aware of and account for it in your data handling activities to stay compliant. Improper data sovereignty could cause you to misunderstand these unofficial data classifications, creating legal ramifications for your business due to its practices. With Kahootz, you receive collaborative working environments which account for both the “OFFICIAL” and “OFFICIAL-SENSITIVE” data classifications under the GSC, which is why organisations like the Ministry of Defence choose us. Your company’s challenge lies in finding software that accounts for data sovereignty laws across all territories where your organisation and its users operate.

So, proper data sovereignty has implications on the governmental and national security levels, as Kahootz’s work with the Ministry of Defence highlights. More generally, the concept is important to your organisation for the following reasons:

Legal Compliance: Improper data sovereignty may lead to your organisation collecting, storing, and handling data while failing to follow the regulations of the relevant territory. Harsh legal and financial penalties are often the result—neither of which you wish your company could absorb.
Business Continuity: Access to your users’ data—especially in disasters or disruptions of your services—is accounted for within the data sovereignty sphere. Storing data appropriately within its country of origin often eliminates the technical and legal challenges of accessing it in disaster-like events.
Protecting Data: Your responsibility to your users comes to the forefront regarding how data sovereignty impacts data protection. When you follow a territory’s guidelines, you maintain control. That control means you can better protect your organisation’s data when unauthorised access or attempted breaches occur.
Competitive Advantage: Demonstrating your commitment to maintaining data sovereignty sets your organisation apart from those that do not take their data responsibilities as seriously. In the UK alone, 80% of consumers say they have concerns over how companies like yours handle their data – concerns you can put to rest through adherence to data sovereignty.

Data Sovereignty in the Cloud

Another concern is added to the data sovereignty issue when you introduce the cloud. By its very nature, cloud computing and storage enable people worldwide to access software and the data contained therein. When the data is hosted on the cloud, who controls that hosting, who has access and from where can all impact the regulations you must adhere to when taking advantage of cloud software. It is easy to cross over into multiple jurisdictions – growing your data sovereignty responsibilities – through cloud software, even if you only serve users in one territory. A basic example is having users in the UK but a cloud provider that operates across multiple regions.

Consider all of these issues when choosing a cloud provider to leverage. Holistic analysis of your data sovereignty needs is necessary, beginning with finding cloud providers offering data residency options. Such options allow you to align your use of cloud software with the territories you operate, ensuring you do not fall afoul of abiding by other territory’s regulations with the cloud software you choose to use. Leverage cloud provider capabilities wherever possible. Many maintain data centres in multiple geographic regions, which is ideal for fine-tuning software usage to ensure the data centre aligns with the territory for which you must keep data sovereignty.

Data Sovereignty vs. Data Localisation vs. Data Residency

You have likely identified that there appears to be some crossover between data sovereignty and two other data-related concepts – residency and localisation. That crossover exists (all three are related in some ways), but there are also distinct differences, as outlined in this table.

Concept	What It Is	Your Considerations
Data Sovereignty	The right of any territory to govern and control – to a legal extent – the data your organisation generates and maintains within its borders.	The key here is that each territory’s government creates regulations for storing and processing data, by which you have to abide. As soon as data starts flowing across borders within your organisation, you have to account for the data sovereignty challenges that it brings.
Data Residency	Where the physical location in which you store your data is.	In addition to being important from a data protection angle, residency influences your organisation’s bottom line. Where you store your data has cost implications—it is more expensive to store data in some territories than others—and performance considerations.
Data Localisation	A concept through which a territory can require you to process and store certain types of data.	Localisation is often implemented to confront national security concerns. It is also about ensuring your organisation’s data is accessible in the case of an emergency.

Best Practices for Data Sovereignty

We can divide the best practices for data sovereignty into the related categories of how your organisation can support sovereignty and the practices themselves.

How to Support Data Sovereignty

No singular data sovereignty solution exists that applies across all organisations. That would be impossible – the data you handle varies widely from the data others handle, even within your sector. Still, these ideas for supporting sovereignty apply on a general level.

Understand Your Organisation: Only by understanding how data is stored and flows through your business can you confront issues related to data sovereignty. Your current methods of storing data matter, but so do elements like the security measures you have in place and your data processing locations. Future expansion plans can also affect all three considerations you must account for.

Create Your Data Sovereignty Goals: Returning to the fact that no two plans can be alike, your goals impact how you support data sovereignty in your organisation. What do you need to do with the information you collect and maintain? Answer that question, and you can start exploring how territorial regulations impact the goals you have for your data. From there, it is possible to form a general roadmap – with the help of your technical and legal teams – for compliant data handling.

Select Appropriate Cloud Vendors: We will not belabour this point as we have already explained how choosing the appropriate cloud vendor can affect your business on the data sovereignty front. Your task is to conduct a thorough evaluation. Confirm that the vendor does not operate in a way that leads to accidental breaking of territorial regulations. A product demo – such as that Kahootz offers for its cloud-based collaboration suite – can provide the answers you need when choosing a supplier.

Best Practices for Data Sovereignty

Now, we move into specific practices you can follow to ensure data sovereignty. The precise execution of these best practices will depend on your organisational needs. However, all typically apply regardless of your industry.

Conduct a Data Audit: Understanding what happens to the data in your organisation – where it is stored, how it is processed, how you transmit that data, and so on – is key to data sovereignty. Audits reveal the information you need. They also highlight any potential sovereignty risks regarding compliance with appropriate territorial regulations.
Adopt Proper Data Protection Measures: Your employees, and even your users, can be the unwitting culprits of data sovereignty impropriety. Protecting your data prevents that. Access controls – such as those implementable in Kahootz – are a strong starting point because they allow you to determine who can access your data and how.
Stay Up to Date: Remember that the territory in which you operate has no responsibility for ensuring you comply with local regulations. It simply creates the laws – your organisation must abide by them. Staying up to date about regulatory changes within each relevant territory means you are not caught unaware of changes.
Secure Sensitive Data: Our examination of the GSC touched on why this is important. Specific data classifications—even those not officially deemed classifications—can create data sovereignty issues. Your best practice here is to trust providers with a track record of working with companies dealing with sensitive data. Kahootz has that track record, working with the Ministry of Defence for its collaboration platform – Defence Share.

Navigating the Data Sovereignty Landscape

Data sovereignty is already a tough nut to crack in ensuring your organisation follows all appropriate regulations within its territory and its users. Add cloud-based services into the mix, and you will get a potential regulatory minefield. Understanding the data sovereignty concept breeds the ability to comply with that concept.

Our closing advice is simple: Learn as much as you can, not just about data sovereignty but also about the vendors to whom you entrust your data. Be proactive in learning about what those vendors do and how they understand your data privacy, security, and storage needs. Combined with applying best practices, that piece of advice will help you navigate the data sovereignty landscape.