What is data loss prevention?

Data loss prevention is a proactive security approach that identifies, monitors, and protects sensitive data from unauthorized access, accidental exposure, or intentional theft, whether that data is in use, in motion, or at rest. Data loss prevention solutions help businesses enforce policies around data handling, reduce the risk of breaches, and maintain compliance with regulatory standards.  

• For managed service providers (MSPs), data loss prevention is a critical tool to help clients safeguard intellectual property, personally identifiable information (PII), and other sensitive data across hybrid work environments. By offering data loss prevention, such as business continuity and disaster recovery (BCDR), as part of a broader cybersecurity stack, MSPs can strengthen their role as trusted advisors, reduce liability, and deliver measurable value through risk mitigation and compliance assurance.
• For internal IT teams, data loss prevention offers visibility into how data flows within the organization, controls user behavior, and enforces security policies without disrupting productivity. These tools provide the oversight needed to protect data from accidental leaks and insider threats, which is critical for building a resilient security posture.  

Why is data loss prevention so critical?

To give you a better understanding of where data loss prevention tools and strategies are imperative, consider this example. An employee attempts to share a document containing private customer data with a third-party contractor. Because the contractor does not have authorized access to this information, a data loss prevention tool would be used to alert the employee of their error, or it could block the employee from sharing the information with anyone outside the organization’s network.

In this case, the data loss prevention tools protect internal information from anyone appearing to be external, but what if you need to share data outside the network? Data loss prevention solution features allow for customized permissions on particular documents, files, folders, or an entire system. This enables visibility based on the assigned permissions of each user, fostering collaboration and information sharing without the risk of a data breach.

Without proper data loss prevention tools and practices in place, these third-party partners, vendors, and business users would have unfettered access to private, protected, or sensitive data. Not only would access be ungated, but the information could knowingly or unknowingly be distributed outside the organization, creating a much higher risk of breach exposure.

Considering that the average cost of a data breach reached $4.88 million in 2024, it’s no surprise that data loss prevention is being prioritized across industries. This astronomical price tag and other factors, such as vendor sprawl, sophisticated cyberattacks, and distributed workforces, have only heightened security concerns year after year. As attack surfaces expand, bad actors get sneakier, distributed systems become more complex, and the risk of human error increases, all contributing to the risk of data loss.  

9 common causes of data loss

The first step to preventing data loss is understanding it, which is why education is especially vital for MSPs guiding clients and IT departments protecting enterprises. These are the most common causes of data loss or a security breach to be aware of:

1. Phishing attacks: Cybercriminals use fake emails and spoofed websites to trick users into revealing login credentials or downloading malware. These attacks often bypass basic security and can lead to ransomware infections or direct exfiltration of sensitive data.
2. Social engineering: Beyond phishing, social engineering exploits human psychology, such as urgency or authority, to manipulate users into sharing access or making risky decisions. Even the best tools can’t protect against a convincing phone call to the help desk if users aren’t trained.
3. Ransomware and malware: Once inside the network, malicious software can encrypt, steal, or corrupt files without the business realizing it. Ransomware prevention requires access control, network security, training, and a robust BCDR solution so you never pay the ransom.
4. Human error: Whether it’s a user mistakenly wiping out a shared folder or an admin misconfiguring a retention policy, human error remains a constant and underestimated risk to data protection. Even with frequent and in-depth security training, accidents will always happen when humans are involved.
5. Hardware failure: Drives fail and devices crash. Without reliable backup and disaster recovery, a single hardware malfunction could result in permanent data loss, especially in environments with an aging infrastructure.
6. Software or application errors: Glitches, bugs, and update failures in business-critical applications can cause data corruption, improper integrations, and sync errors that lead to data inconsistencies and cybersecurity vulnerabilities.
7. Unsecured endpoints: Laptops, mobile devices, and even PCs used in hybrid environments often lack proper security. If an endpoint is lost, stolen, or compromised, any locally stored data may be exposed without encryption or backup.
8. Poor or misconfigured backups: Having backups isn’t enough. They must be correctly configured, tested regularly, and protected from threats like ransomware. Backup failures often aren’t discovered until it’s too late, making BCDR plan testing
9. Natural disasters and physical damage: Fires, floods, power surges, and other unforeseen physical events can destroy on-prem storage or critical infrastructure, especially for businesses without cloud-based backups or off-site redundancy.  

The MSP’s role in data loss prevention

MSPs are essential to preventing data loss by combining proactive defense with reliable recovery. They identify risks, such as bad actors, insider threats, and system misconfigurations, then implement layered safeguards, including immutable backups, anti-ransomware technology, and training and support. When incidents occur, MSPs ensure fast data restoration and minimal downtime. They also support regulatory compliance by enforcing long-term retention policies and protecting sensitive information. Data loss prevention is about tools, strategy, oversight, and execution. MSPs bring the expertise and systems needed to keep critical data secure, ensure business continuity, and help clients stay resilient in a constantly evolving threat landscape.

Download the MSP Guide to Calculating Downtime with Clients to quantify the impact and build a business case for data loss prevention solutions.  

The role of internal IT in data loss prevention

Internal IT teams are responsible for protecting organizational data from loss, theft, or misuse. They develop and enforce security policies, manage user access, and implement tools such as encryption, backups, endpoint protection, and disaster recovery. When incidents occur, whether due to human error, cyberattacks, or system failure, IT is on the front line to investigate, respond, and restore data. They also play a key role in employee training and regulatory compliance. Effective data loss prevention requires both technology and oversight, and internal IT departments ensure both are in place to keep company-only information secure and business operations running smoothly.  

Know where the data resides

Understanding where the organizations’ sensitive data is stored and processed is the first step in stopping digital threat actors, minimizing the impact of employee mistakes, or preventing catastrophic data loss. Depending on the business, data might come from a wide variety of sources such as:

• Servers
• Network devices
• End user devices
• Storage area networks
• Backup arrays
• File shares
• Third-party applications and cloud applications

While data discovery is the first step of designing a protection plan, a data loss prevention solution must also be able to classify the data in order to protect it. For example, it must encrypt different document classes, such as protected health information (PHI) or board meeting notes, appropriately and intuitively. Once the information has been inventoried, it can be classified within a data loss prevention management framework. Generally, there are three types of data:

1. Data in use: Stored in RAM or actively being processed by a CPU.
2. Data in motion: Being sent between devices, both inside and outside of a network
3. Data at rest: Not actively being sent between devices and stored physically in computer data storage

Various data loss prevention techniques are then used to protect sensitive data from exfiltration. Content and context awareness are also used to monitor the proper management of data by authorized users.

Why data loss prevention needs a strong BCDR plan

While data loss prevention plays a critical role in minimizing risk and reducing the likelihood of data breaches, it isn’t foolproof. Even with strong data loss prevention policies, sophisticated cyberattacks, human error, or zero-day threats can still lead to data loss or system downtime. That’s why a comprehensive disaster recovery plan is essential.

For both MSPs and IT teams, business continuity and disaster recovery are the safety net when prevention is circumvented. It ensures you can respond quickly, restore operations, and recover data with minimal disruption, no matter if the incident is caused by ransomware, accidental deletion, or infrastructure failure.

Data loss prevention helps stop data from leaving the organization. BCDR ensures you can get it back when it’s lost. Together, they form a foundation for security using proactive protection backed by proven recovery.

Get The MSP’s Guide to BCDR to see how to build, implement, and scale your data protection services successfully.