What is Encryption and Why is it Important?

By Rafay Muneer on Nov 20, 2024 6:30:11 AM

What is Encryption and Why is it Important for Organizations?

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Encryption is an organization's strongest defense against data breaches. Here is what encryption is and why it is so important.

Ever felt that uneasy knot in your stomach when thinking about the security of your organization’s sensitive data? You’re not alone. In today’s digital landscape, the threat of data breaches isn’t just a distant possibility. And let’s be honest, the stakes are high. Whether you’re a legal professional ensuring compliance, a law enforcement officer handling confidential information, or an IT security expert tasked with safeguarding systems, the question remains: how can you effectively protect your most valuable data? The answer may be encryption.

Your robust IT infrastructure, skilled team, and secure networks may seem to protect your organization, but if your data remains unencrypted, you are vulnerable to a data breach. A single successful attack, such as a stolen laptop or unsecured server, could expose your company's sensitive information to unauthorized access.

This is not just a possibility. Your organization could be facing leaked confidential employee details, customer credit card numbers, or proprietary company secrets, all of which can lead to costly fines and a damaged reputation.

The aftermath? Downtime, financial losses, and frantic damage control. Unfortunately, many organizations still rely on outdated or insufficient security measures. This unknowingly leaves the door wide open for cybercriminals. But luckily, organizations like yours don't have to let a breach occur under your watch. Encryption is the missing link in your IT strategy, and ignoring it could be the costliest mistake you make.

But what is encryption, and why is it essential for your organization? In this blog post, we'll be exploring just that.

The Insecurity of Data in the Digital Age

Organizations today, regardless of their industry, collect and store massive amounts of data, much of which is sensitive and confidential. Legal teams deal with confidential client communications. An organization's IT and security staff face the daunting task of defending against increasingly sophisticated cyber threats, while compliance officers must ensure the organization meets strict data privacy laws. The stakes couldn’t be higher.

In the first half of 2025, 1,732 data compromises were publicly reported in the U.S., representing an 11% year-over-year increase compared to the same period in 2024, which puts the whole year on track to be another record-setting one.

Notably, these incidents affected 165,745,452 individuals, nearly half of the U.S. population, although this victim count is significantly lower than the mid-2024 levels due to fewer mega breaches occurring this year. Cyberattacks remain the primary cause of breaches, accounting for 1,348 incidents, which represent approximately 78% of confirmed compromises in H1 2025 and affect 114,582,621 victims.

On the financial side of data breaches, costs continue to rise in 2025:

Experts now project that the average global cost of a data breach will exceed $5.0 million this year, driven by the increasing complexity of attack methods, expanded cloud exposure, AI-enabled threats, and heightened regulatory penalties.

IBM’s 2024 report already recorded an average breach cost of $4.88 million, a 10% rise over 2023, with U.S. organizations averaging $9.36 million, the highest to date. Projected cost drivers include mounting class-action settlements, which are expected to outpace regulatory fines, and growing cyber insurance exclusions that leave organizations increasingly exposed.

What Happens When Data Isn't Encrypted?

When data isn’t encrypted, it’s as exposed as a postcard in the mail. Anyone with access to it, whether during transmission or storage, can read it in plain text. Consider all the sensitive information your organization handles, including financial records, legal documents, healthcare information, and customer details. If you’re not encrypting that data, you’re practically inviting bad actors to exploit it.

Here’s where the real pain sets in:

Legal Repercussions: Non-compliance with regulations such as GDPR, HIPAA, or CCPA can result in substantial fines, sometimes exceeding tens of millions of dollars.
Reputational Damage: Sensitive client information can often be leaked in a data breach. Your customers trust you with their data; a breach can shatter that trust.
Financial Loss: A breach can disrupt business operations, lead to the loss of clients, and result in lawsuits, all of which can add up to substantial financial losses.
Data Manipulation or Theft: Without encryption, attackers can alter or steal your data, resulting in operational chaos or the loss of intellectual property.

Without encryption, you’re left with a glaring vulnerability that bad actors are eager to exploit.

What is Encryption?

Now that we’ve looked at the consequences, let’s talk about the solution: encryption.

At its core, encryption is the process of converting plaintext data (readable information) into ciphertext (unreadable, encoded information) using an algorithm. The only way to revert this encrypted data to its original form is by using a decryption key. Only authorized parties have access to this key.

But encryption isn’t just about making data unreadable to outsiders. It’s about ensuring that even if unauthorized individuals manage to intercept or access your data, it remains entirely useless for them.

The Two Types of Encryptions

1. Symmetric Encryption: This type of encryption uses the same key for both encryption and decryption. It's fast but requires secure key distribution. An example is the Advanced Encryption Standard (AES).

2. Asymmetric Encryption: There are two keys in asymmetric encryption, one public and one private. The public key encrypts the data, and the private key decrypts it. This is more secure but slower. A typical example is RSA encryption.

Why Is Encryption Important?

Encryption has evolved from being a niche technology to becoming the backbone of modern data security. But why is it so critical for organizations today? Let’s break it down.

Data Protection in Transit and at Rest: Whether your data is traveling across networks or stored, encryption ensures it remains safe. In transit, encrypted data is protected from being intercepted, while at rest, it remains secure from unauthorized access.
Compliance with Regulations: Legal mandates, such as GDPR, HIPAA, and CCPA, require encryption for sensitive information. If your organization handles health records, financial data, or customer information, encryption helps you stay compliant and avoid substantial fines.
Mitigating Breach Fallout: Even if a breach occurs, encrypted data is useless to cybercriminals without the decryption key. This drastically reduces the potential damage of a security incident.
Ensuring Data Integrity: Encryption ensures that data hasn’t been tampered with. In industries such as finance and law, where document integrity is crucial, encryption provides a means to verify that data remains intact.
Building Customer Trust: Customers and clients are becoming more aware of how their data is handled. Implementing robust encryption protocols demonstrates that your organization takes data privacy seriously, fostering trust and long-term loyalty.
Preventing Insider Threats: Encryption Isn’t Just About Protecting Data from External Threats. Insider threats, whether malicious or accidental, pose a significant risk. With encryption, even employees with access to specific data sets can’t decrypt information they’re not authorized to view.

Best Practices for Implementing Encryption in Your Organization

Encryption is highly relevant to organizations that house data. But the question is, how do you do it best? Here are some of the best practices for encryption that you can follow:

Classify Your Data

Not all data requires the same level of protection. Start by classifying your data based on sensitivity and implement encryption protocols that match each level of sensitivity.

Use Strong Encryption Algorithms

Weak encryption is as bad as no encryption at all. Stick to industry-standard encryption algorithms, such as AES-256 or RSA-2048, to ensure your data is adequately protected.

Manage Encryption Keys Securely

Your encryption is only as strong as your key management system. Use secure methods for storing and distributing keys and ensure that only authorized individuals have access to them.

Encrypt at Multiple Layers

Don’t rely on just one layer of encryption. Encrypt your data at the file, disk, and application levels for comprehensive security.

Regularly Update Encryption Protocols

As encryption technologies evolve, so do the threats that seek to break them. Ensure your organization is using the latest encryption standards and protocols to stay ahead of potential vulnerabilities.

Secure Your Data Today

Encryption is not just a checkbox on a compliance list. It’s a fundamental practice for protecting your organization’s most valuable asset, and that's none other than your data. Whether you’re a legal officer safeguarding sensitive client information or a CISO defending against cyberattacks, encryption is an indispensable tool for maintaining security, trust, and compliance.

But encryption is just one part of a broader cybersecurity strategy. Implementing it effectively requires not only the right tools but also the expertise to ensure your organization’s data remains safe in an ever-evolving digital landscape.

It’s time to take a proactive approach to data security. The cost of inaction? Far too high to ignore.

Key Takeaways

Data Protection at All Stages: Encryption protects data both in transit and at rest, safeguarding it from unauthorized access during storage and transmission.
Regulatory Compliance: Encryption enables organizations to comply with laws such as GDPR, HIPAA, and CCPA, thereby reducing the risk of non-compliance fines and protecting sensitive information.
Mitigating Breach Impact: Even if a data breach occurs, encrypted data remains unreadable without the decryption key, thereby minimizing potential damage and protecting valuable assets.
Customer Trust and Loyalty: Implementing strong encryption builds customer confidence by demonstrating your commitment to safeguarding their personal and sensitive data.
Prevention of Insider Threats: Encryption protects data not just from external threats but also mitigates risks from internal personnel who may have unauthorized access to certain information.
Best Practices for Encryption: To maximize security, organizations should classify data by sensitivity, use strong encryption algorithms, manage encryption keys securely, and regularly update encryption protocols.

Encryption as a Vital Component of Cybersecurity

Encryption is the cornerstone of modern data security, providing vital protection against the ever-growing threat of cyberattacks. Whether your organization is handling sensitive customer data, confidential legal information, or proprietary company secrets, encryption ensures that even in the event of a breach, your data remains unreadable and secure. It also helps maintain compliance with regulatory standards, such as GDPR, HIPAA, and CCPA, while building customer trust and mitigating the financial and reputational risks associated with a data breach. As cybersecurity threats continue to evolve, implementing strong encryption protocols and keeping your systems up to date is no longer optional. Still, it's a necessity for safeguarding your most valuable asset: your data. Taking proactive steps today can prevent costly mistakes tomorrow, ensuring your organization remains secure, compliant, and trusted in the digital age.