In today's data-driven world, businesses must navigate the complexities of data management while ensuring compliance with an ever-growing array of laws and regulations.

Two concepts that often arise in this context are data sovereignty vs data residency. While related, these terms refer to distinct aspects of data management. Understanding their differences is crucial for businesses to make informed decisions on where to store their data and how to remain compliant with data protection regulations.

Understanding data sovereignty and data residency

Data sovereignty and residency are often used interchangeably, but they refer to different aspects of data management. That's because both concepts revolve around the idea of storing data, but their focus lies in different areas.

• Data sovereignty refers to the notion that data is subject to the laws of the country or jurisdiction in which it is physically stored. 
• Data residency concerns the geographical location of the data itself.

Both concepts have become increasingly important for businesses managing data in recent years, especially as cross-border data flows and cloud computing become more commonplace.

Let's have a quick look at what each means.

What is data sovereignty?

Data sovereignty is the concept that data is used and kept per the laws and regulations of the country or jurisdiction in which it is situated. This means that the data is protected by the legal regulations of the country  where it is physically stored.

Governments, businesses, and individuals are all stakeholders in data sovereignty, as it affects the security of sensitive data and compliance with various legal and regulatory requirements. Examples of data sovereignty laws include:

• Canadian Consumer Privacy Protection Act (CCPPA)
• General Data Protection Regulation (GDPR)
• Australian Privacy Principles (APP)

These laws provide consumers with control over their data and promote increased transparency regarding organizations' utilization of data containing personal identifiers. To ensure data sovereignty, organizations should undertake a data audit to identify any potential risks and ensure adherence to the applicable laws and regulations. Additionally, implementing a data protection policy is essential to guarantee the secure handling and storage of sensitive data.

(Minimizing data risk and vulnerability is a key aspect of maximizing data resilience.)

The importance of data sovereignty

Data sovereignty is essential for businesses storing data in the cloud to observe the laws and regulations of the country or jurisdiction. This helps countries safeguard their citizens' and companies' confidential and private data and avoid potential legal problems with mishandling data.

In practical terms, this means that businesses need to ensure that their data is stored in data centers that comply with the relevant laws and regulations. Implementing data protection measures is a key aspect of ensuring data sovereignty. This includes:

• Encryption
• Access controls
• Monitoring

These measures will help you protect sensitive data from unauthorized access and misuse. In addition, staying up to date with regulatory changes is also crucial. To remain compliant with evolving regulations, data protection policies and practices must be reviewed and modified constantly.

Common challenges faced in data sovereignty

Data sovereignty presents a few challenges, which we can sum up as complexity and the ever-changing nature of legal regulations.:

Complex legal regulations

One of the most common challenges faced in data sovereignty is understanding the legal requirements associated with storing data in different countries or jurisdictions. This can be particularly complex for organizations handling international data, as they need to ensure compliance with a variety of different laws and regulations.

Implementing effective data protection measures is another key challenge, as businesses need to balance the need for security with the practicalities of data storage and management.

Evolving legal regulations

Staying up to date with changes in data protection laws and regulations is another important aspect of managing data sovereignty. As laws evolve and new regulations are introduced, businesses need to adapt their data protection policies and practices accordingly.

To overcome these challenges, businesses should: 

• Invest in comprehensive data audits
• Implement robust data protection policies
• Stay informed of changes in data protection laws and regulations

This would build trust and maintain the confidence of their customers and partners in their data. Now let’s turn to data residency. 

What is data residency?

Data residency refers to where data is stored. This could be a physical or virtual location.

Unlike data sovereignty, which focuses on the legal framework governing data, data residency is primarily concerned with the geographical location of the data itself. This is particularly important for organizations required to adhere to data privacy regulations, such as the General Data Protection Regulation (GDPR) in the European Union.

Understanding the legal requirements for storing data in a specific country is essential to fulfill data privacy and security standards, especially when dealing with cross-border data flows. Data residency also involves the practice of data mapping, which helps organizations understand: 

• What data they possess
• Where it is located
• The relevant data residency policies for each location

Reviewing Service Level Agreements (SLAs) with cloud providers is essential for verifying where data can and cannot be moved, stored, or processed.

(Data mapping is just one of many ways to improve data observability.)

The importance of data residency

Data residency is essential for adhering to data protection regulations, bolstering security, and providing access to data. It guarantees that data is stored in a predefined geographic area and is subject to the laws, customs, and expectations of that region.

For organizations handling international data, understanding the legal requirements of storing data in a certain country is crucial for ensuring compliance with data privacy and security standards.

(There is no compliance without a strong security framework, these CIS controls can help you build one.)

Cloud-based vs on-premise data storage

In the context of data residency, businesses may need to consider the implications of using cloud-based storage solutions.

Choosing between cloud-based and on-premise data storage has significant implications for data residency. Cloud storage offers increased flexibility and scalability compared to on-premises storage, but organizations may not have complete control over where their data is stored or how it is managed.

This can be particularly important when dealing with sensitive or regulated data. Some common examples of cloud storage may include:

• Public cloud
• Private cloud
• Hybrid cloud

On the other hand, on-premise storage provides the highest level of control over data, with the organization responsible for ensuring that it is stored securely and accessible only to authorized personnel.

Data localization vs data sovereignty and residency

Data localization is a related concept that refers to the practice of storing data on servers that are physically situated in the same country or region as the data was generated.

Data localization intends to maintain data within the legal boundaries of the nation or area in which it was produced to adhere to data protection regulations.

Data sovereignty and data residency are both important aspects of data localization, as they help to ensure that data is stored in compliance with the laws and regulations of the country or jurisdiction in question. It is worth noting that data localization laws have been growing, with 75% of businesses implementing some data localization rules internationally.

Final thoughts

Data sovereignty focuses on the legal framework governing data, while data residency is primarily concerned with the geographical location of the data itself.

Understanding the differences between data sovereignty and data residency is crucial for businesses to make informed decisions about where to store their data and how to remain compliant with data protection regulations. Both concepts are increasingly important in an interconnected world where businesses need to navigate the complexities of multiple legal and regulatory frameworks.

By implementing robust data protection measures, staying up to date with changes in data protection laws and regulations, and carefully considering the implications of different data storage options, businesses can help ensure their data's security and compliance.