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Information Classification in Information Security: Criteria, Classification & Importance

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26th Jul, 2022
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Information Classification in Information Security: Criteria, Classification & Importance

Today, businesses are dependent on internet and cloud services. We all are aware that the volume of data produced every day increases the risk of cyber-attacks. It is imperative for businesses to look for full-proof and robust data security solutions to ensure critical and confidential data remains safe. 

But for that, you have to understand the importance of each data and its worth. This is where data classifications come into the picture. They help in identifying sensitive information and also assign levels of sensitivity to the data. Hence, information classification is mandatory for ensuring information security in any organization.

Here, we will learn in detail about data classifications, the ways of classifying data, criteria for classification, and most importantly, the benefits offered. 

What is information classification or data classification in information security?

Information classification, also known as data classification, is how corporate information is classified into specific significant categories so that critical data remains protected and safe. In a business, vast data volumes are handled every day – invoice records, email lists, customer information, user data, order history, etc. Obviously, all data is not equally important, and some information will need higher protection than the other. 

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If a piece of information is critical or sensitive, it needs more protection as it is more vulnerable to security threats. It is easier to ascertain which information needs more protection and how data can be classified and labeled with information classification. For instance, files of different departments of an organization should be kept separately.

They should be saved in different folders, and only individuals of a particular department should be given access to the files so that they can work with the data. This ensures information security and easy access to the files as and when needed. 

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How to classify data or information?

If you want to have your business data well organized and want to keep it useful and easily accessible when needed, you cannot do without information classification. Information or data classification might seem to be quite easy and simple initially, but there are multiple layers involved in it. When classifying information of high volume, relevance and variety might turn out to be quite a cumbersome job. 

Certain steps make classifying information a little easier. 

You have to understand and then analyze the information assets and assign each of them a level of sensitivity. 

The first step of data classification is assigning a value to every information asset. The value is assigned depending upon the risk of harm or loss if the information gets disclosed. Based on value, information or data can be sorted as:

Confidential information 

Confidential information should have the highest levels of security and protection measures. This data or information is labeled confidential by all entities included or impacted by the data. 

Classified information

Classified information has highly restricted access as per regulation or law.

Restricted information

Such data and information is made available to almost everyone but not to all employees in the business organization. 

Internal information

This is probably the most common kind of data or information. This information is intended to be available and accessible by all employees in the organization. 

Public Information

It is evident from the name of the information that this data is open to the public. Anyone and everyone inside and outside the business organization can have access to this data. 

Labeling of each data asset

Once the data classification is done depending on its value, a new system is created for data labeling. In a good data classification, the labeling will be easy-to-understand, simple, and consistent. 

Handling individual data asset

Now that classification and labeling are done, the business organization designs and develops a set of rules so that information remains protected and safe based on classification. Information security is assured with these steps. 

Criteria for information or data classification

When data classification is done for information security, specific criteria have to be fulfilled, and some conditions have to be kept in mind:

Useful life

A data is labeled ‘more useful’ when the information is available readily for making changes as and when required. Data might need to be changed from time to time, and when the ‘change’ access is available, it is valuable data. 

Value of data

This is probably the most essential and standard criteria for information classification. There is some confidential and valuable information of every organization, the loss of which could lead to great losses for the organization while creating organizational issues. Therefore, this data needs to be duly classified and protected. 

Personal association

It is important to classify information or data associated with particular individuals or addressed by privacy law. 


The value of information often declines with time. Therefore, if the given data or information comes under such a category, the data classification gets lowered. 

Why is data classification important?

When you have a well-planned and well-created data classification system in place, it becomes easy to track, retrieve and locate important information and data. Mentioned below are some of the most common reasons why information classification is essential:

Rules and Regulations Compliance 

Data classification in information security helps firms comply with rules and regulations like the GDPR audits. For classifying data, organizations can easily implement various standards. This is as important as labeling information as confidential or sensitive or protecting data from threats etc. 

High-end security

The main aim of information classification is none other than protecting sensitive data and information. Depending on the sensitivity and importance of the information, appropriate security measures are suggested so that the information cannot be copied, transmitted, or retrieved.

Protection from outside threats can be managed well with various measures, including compliance with data protection standards, data encryption, and data storage in servers with strong firewalls. Insider threats are also not uncommon in the form of accidental data breaches or intentional data theft. Moreover, with information classification, there is heightened security awareness throughout the organization. 

Enhanced Efficiency

Efficiency in day-to-day activities is enhanced when businesses have their information duly and adequately classified and organized. In case of changes, they can be easily traced. Data can also be retrieved and conveniently located. 

Optimizing risks and resources

Once data classification is done, there is an obvious improvement in risk and information classification resources. This impacts effective and efficient information security. When data is classified based on the level of business impact and sensitivity, businesses know which data needs more protection and priority. Accordingly, information security budgets can be decided. 

Raising awareness regarding cyber threats and cyber risks

Specialized information security teams contact business owners directly to discuss information security and how it is important for the business. Discussions are held regarding the management of cyber incidents or risks. Cyber threat awareness and information security management are improved throughout the business organization for overall security. 


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Businesses vary from one another, and accordingly, their data classification needs and techniques are also different. The aim is to choose the best classification system for their data to reduce the chances of cyber attacks and threats. Cybersecurity professionals are being trained duly to offer maximum protection from cyber-attacks and keep data and information safe and secured. 

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Pavan Vadapalli

Blog Author
Director of Engineering @ upGrad. Motivated to leverage technology to solve problems. Seasoned leader for startups and fast moving orgs. Working on solving problems of scale and long term technology strategy.

Frequently Asked Questions (FAQs)

1What is the need for data classification?

Data classification is important so that valuable documents can be protected and secured correctly. On document classification, we can understand its level of sensitivity and provide adequate protection likewise.

2Does sensitivity and importance of data change with time?

Yes, the sensitivity and importance of data change with time. Data that might be highly sensitive and requires top-grade information security might lose its importance in due time. It can be categorized under ‘low importance’ data.

3How does labeling help in data classification?

Once data is classified, it is labeled in different categories for easy access and identification. In addition, information can be retrieved quickly once data is classified and labeled.

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