What is the significance of data classification in cyber risk management?

Data classification plays a crucial role in cyber risk management by determining the appropriate level of protection for sensitive information. Different types of data possess varying levels of sensitivity and value, and classification allows organizations to categorize data accordingly. This classification helps identify which data requires stringent security measures, such as encryption and access controls, based on its sensitivity. By doing so, organizations can allocate resources more effectively, ensuring that critical and sensitive information is adequately protected from unauthorized access, breaches, and other cyber threats. This proactive approach not only safeguards vital data but also helps organizations comply with relevant regulations and standards related to data privacy and security.