5 Types of Data Classification (With Examples)

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Updated March 11, 2023

Nearly all organizations and companies have digital information that needs to be kept
secure. Whether it's personal customer information, business transaction receipts or
highly sensitive security reports, data classification is often the first step in safeguarding
individual or group information to decrease the risk of harm if misused. Knowing more
about data classification can help you develop professional capabilities to use in nearly
any industry, though especially an IT career. In this article, we explain what data
classification is, discuss why it's important and share five data classification types with
examples to help you understand this information technology term.Related: A Beginner's
Guide to Information Technology

What is data classification?

Data classification is the act of assigning an information category based on the content's
level of sensitivity. It helps determine what amount of safeguarding and security controls
are necessary for the data based on its classification. If you work in data classification or
data management, you might hold job titles like data steward, data manager or data
scientist when handling this kind of responsibility. For example, you might review all
the files and digital transactions of a company, classifying the data into categories before
putting parameters into place to protect each classification.To help you understand how
data classification might apply to your role or organization, consider asking these analysis
questions to determine what type of data and how much of it your job creates, transfers
and stores:
What information does your company collect from customers, clients, vendors and
other business entities?
What information and data does your company create, like files, spreadsheets,
customer profiles and receipts?
What's the security or sensitivity level of that data?
What parties need to access your data and how frequently?
What digital record-keeping does your company do, and how long does it keep
documents of each category?

Related: Learn About Being a Data Scientist

Why is data classification important?

Data classification is important because it helps you organize data to keep it secure,
potentially preventing or limiting data breaches, hacks and cyberattacks. It acts as a
safety measure, especially as more businesses, companies and organizations use
advanced technology and digital platforms like cloud computing, email, online payment

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methods, digital receipts and accounts, data storage and messenger applications.
Because compromised data can have a low, moderate or high impact, it's critical to take
measures to categorize and protect it, and data classification is the first step in the
process. Data classification can ultimately help:
Protect the integrity, availability and confidentiality of data
Safeguard personally identifying information and proprietary business information
Stay compliant with regulations, guidelines and laws
Determine who has access to the data, how often and by what means
Establish how long the data gets kept for record-keeping purposes and what
security measures to deploy
Preserve client trust
Promote a culture of data security
Uphold the brand and company reputation
Save time and money by focusing appropriate controls on certain data

It's important to evaluate data classifications regularly to ensure your data remains
categorized correctly, especially if there are any major technological advances or changes
in federal or state laws, regulations and data security guidelines. If you determine some
data needs reclassification, consider reviewing the security and safety measures around
it in case they also need to change accordingly. Within a business setting, also consider
periodically reviewing which employees have access to what information, especially
during role changes. Often, the sooner you update renewed data classifications and
security measures, the safer your data is with less internal and external risk.Related:
What Is Data Management?
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5 data classification types

Data classification often involves five common types. Here is an explanation of each,
along with specific examples to better help you understand the various levels of
classification:

1. Public data
Public data is important information, though often available material that's freely
accessible for people to read, research, review and store. It typically has the lowest level
of data classification and security, since this data often gets shared, updated and passed
around and poses little to no risk if known, accessed or used by others. Public data can
be personal to an individual or to a company or organization. Here are some common
examples of public data:
First and last names
Company names and founder or executive information
Dates of birth or dates of incorporation
Addresses, phone numbers and email addresses
Job descriptions and position postings

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 Press releases
Organizational charts
License plate numbers

2. Private data
Private data differs from public data, though it doesn't have a high level of security like
some other types do. Still, private data is information that's prudent to keep from public
access to best protect the integrity of the information and access to other data through it.
Private data is often information you might keep private through use of a password or
fingerprint access features, like your email inbox or smartphone home screen, for
example. Typically, if private data got shared, destroyed or altered, it might pose slight
risk to an organization or individual. Examples of private data might include:
Personal contact information, like email addresses and phone numbers
Research data or online browsing history
Email inboxes or cellphone content
Employee or student identification card numbers

3. Internal data

This data often relates to a company, business or organization. Only those employees
who work for the company typically have access to internal data. Some examples of
internal data can include:
Business plans and strategies
Internal emails or memos
Company intranet platforms
Budget spreadsheets and revenue projections
Email and messenger platforms
Archived files
Universal resource locators (URLs)
Internet protocol (IP) addresses

With internal data, there can be separate levels of security and access among
employees. For example, an entry-level accountant might not have the same level of
access that a financial executive might have to historical files or future forecasting
reports.

4. Confidential data
A confidential data classification means a limited group of individuals or parties can
access the sensitive information, often requiring clearance or special authorization.
Confidential data access might involve aspects of identity and authorization management,
for example, like regulated links to files or specialized password authentication to view
content. Some examples of confidential data include:
Social Security numbers
State-issued identification card numbers or driver's license numbers

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 Vehicle identification numbers (VINs)
Medical and health records
Insurance provider information
Credit card numbers, pin numbers and expiration dates
Cardholder account and transaction information
Material on a credit card's magnetic strip
Financial records
Certification or employment license numbers
Student or employee records
Biometric identifiers, like fingerprints

Within a business setting, confidential data also might have restrictions within
departments or employees. It's common practice to strictly limit the amount of people or
positions with access to confidential material, and it sometimes might involve signing a
non-disclosure agreement to further protect the integrity of the data.Related: Top 10
Cybersecurity Certifications and How They Will Improve Your Career

5. Restricted data
Restricted data is the most sensitive of the data classifications. It often has strict security
controls to limit the amount of people with access to the data and backup systems, like
data encryption, to prevent malicious users from accessing or reading the content on
restricted platforms. If breached or compromised, restricted data might pose a risk to
public health and wellness or the proprietary information of a company or organization.
Cyberattacks against restricted data are typically illegal, resulting in potential fines or
legal charges, especially if the compromised data falls under state or federal regulations
and laws.Here are some examples of restricted data:
Data protected by strict confidentiality agreements
Federal tax information
Protected health information (PHI)

Confidential and restricted classifications sometimes get used interchangeably. State and
federal requirements often provide a framework for organizations to classify their data
and information around, like PHI. For example, the Health Insurance Portability and
Accountability Act (HIPAA) helps ensure the confidentiality, storage, transmission and
access of patient records across various entities like doctors' offices, hospitals,
community health centers, schools and universities and pharmacies.
 

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