Protecting Your Digital Assets With Microsoft Office 365 Data Loss Prevention

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Office 365 Data Loss Prevention is a little know, powerful tool that can be leveraged to protect your sensitive data from being shared. Imagine all the customer data you’ve collected tucked away in spreadsheets. Or those confidential contracts, stored within emails. Maybe it’s financial records living in your OneDrive. Now, imagine all of that gone – leaked, stolen, or accidentally sent to the wrong person. That’s the nightmare scenario that keeps IT admins and business owners up at night. That’s why data loss prevention (DLP) is downright essential.

Office 365 is a powerful tool, no doubt. But with all that collaboration, file sharing, and ease of access, sensitive data becomes vulnerable. Don’t worry, though; that’s where Office 365 DLP comes to the rescue. Think of it as your digital watchdog, sniffing out potential leaks or accidental sharing. In this guide, we’ll cover what DLP is. We’ll show how to use its power in Office 365. And, we’ll help you protect your organization’s precious data. Best of all, activating and using this little known feature is FREE with Microsoft 365 E5/A5/G5/F5 licenses.

Key takeaway: Data leak prevention is a way to keep sensitive data (financial, credit card, SSN, personal information, health information, etc.) from leaving the organization by an employee through emailing or other Microsoft apps (Excel, cloud, Teams, etc.).

Microsoft Office 365 Data Loss Prevention guide

What is Data Loss Prevention in Microsoft 365?

At its core, Office 365 DLP is like a set of high-tech security cameras for your data. It scans content in your Office 365 environment. This includes emails, documents, chats in Teams, and more. It searches for sensitive information that shouldn’t wander off. Once it spots something, DLP can take automated actions based on the rules you’ve set up. This could involve blocking emails with sensitive attachments, encrypting documents, or even popping up warnings to users if they’re about to share something they shouldn’t.

Key Features: What Can It Do?

  • Finds Sensitive Information: DLP is smart; it doesn’t just look for obvious things like credit card numbers. It uses built-in templates for things like financial data or medical records. It also lets you customize rules to match your company’s data needs to protect. DLP looks for the types of sensitive information an organization would want. These include credit card numbers, Social Security or insurance numbers, and other personally identifiable information (PII).
  • Takes Action: Once DLP spots a potential leak, it’s not just a tattletale. You can configure it to automatically block content, encrypt it, or send alerts to admins before something bad happens.
  • Educates Users: DLP can also include “policy tips” – little pop-up warnings to gently remind users about your data protection rules while they’re working.

Types of Sensitive Information It Protects

  • Regulatory Compliance: DLP comes with templates for common things like PCI-DSS (credit card data), HIPAA (medical info), and other regulations specific to your industry.
  • Company-Specific Data: You can customize DLP to flag things like employee IDs, confidential project names, trade secrets, or anything uniquely important to your business.

Related Article: Compliance as a Service

DLP’s Role in the Big Security Picture

Office 365 has a whole arsenal of security features, and DLP plays a crucial team role. It works alongside things like:

  • Encryption: DLP helps you spot sensitive data that needs to be encrypted.
  • Identity and Access Management: DLP makes sure that only the right people are accessing the right data in the first place.
  • Monitoring and Reporting: It provides valuable insights into what kinds of data your company handles and how well you’re protecting it.

Building Your Office 365 DLP Team

Since DLP policies can touch many areas of your business, a solo effort by the IT department is a recipe for trouble. It’s essential to get the right people involved at the beginning. Think of this as assembling your data protection squad. Here’s what these key stakeholders bring to the table:

  • Understanding the Rules: Compliance and legal experts will ensure your policies align with all those regulations, laws, and standards your business has to follow.
  • Knowing What’s Vital: Business owners and front-line users have the deepest insights into which data is critical – from sensitive customer information to proprietary company secrets.
  • Spotting Risky Habits: The security team and IT admins know the common slip-ups that put data at risk. They’ll help translate those into actions that your DLP policies can watch for.
  • Balancing Risk and Reality: Everyone brings their priorities to the table to create a plan that protects what matters without completely crippling daily work.
  • Incident Response: When policy violations occur, knowing who handles the review and how to fix problems should be laid out ahead of time.

Focus Areas

Often, DLP strategies lean heavily towards regulatory compliance (think keeping credit card or healthcare data safe). However, don’t forget about your company’s unique intellectual property – it deserves safeguarding too!

Who to Include

Here’s a starting point for your team:

  • Compliance/Legal Experts
  • Chief Risk Officer
  • Security Specialists
  • Data Owners (Department heads, project leads)
  • Everyday Users (Representatives who work with sensitive data)
  • The IT Crew

Identify the Data That You Want to Protect

You’ve got your data protection squad assembled, now it’s time for the team to get specific. What kinds of sensitive information do you need to shield with DLP? Here’s where those stakeholders work their magic:

  • Following the Rules: Legal and compliance folks know exactly what regulations dictate your must-protect list (think things like customer financial data or health records).
  • Guarding Company Secrets: Business owners can flag things like product designs, client lists, or internal financial documents that give your organization its competitive edge.
  • Mapping Data Flows: IT and the everyday users understand how this information moves around – who sends what, where it’s stored, and the kinds of documents it lives in.

Common Categories for DLP Protection

While each company is unique, here’s a starting point for the categories you’ll likely discuss:

  • Financial: Credit card numbers, bank account details, etc.
  • Medical: Patient information, health records, and anything covered by healthcare privacy laws.
  • Personally Identifiable Information (PII): Names, social security numbers, addresses, and other data that identifies specific people.
  • Intellectual Property: Trade secrets, product blueprints, internal strategies… the stuff you’d never want a competitor to see.

An Example: Let’s say your company processes customer data for other businesses. Your stakeholders might zero in on that personally identifiable information and financial details as the top priorities for DLP protection.

Pinpoint Where are the Sensitive Items and What Business Processes are They Involved In?

Think of your sensitive information like water flowing through pipes. To stop leaks, you need to know exactly where those pipes lead. Your business can’t afford to just slap DLP policies everywhere – you need targeted protection. Here’s why understanding your data landscape is so important:

  • Zeroing In on Critical Areas: Where does that sensitive customer data, those confidential contracts, or those financial records actually live within your company? Is it all neatly stored in databases, or does it get scattered across emails, spreadsheets, and even chat messages with clients?
  • Following the Processes: How does this data get used? Think about the steps involved – is information being collected, analyzed, shared with partners, or maybe even used in marketing materials? Each step presents potential risks to keep an eye on.
  • Tailored Protection: Once you have this map, you won’t just blindly apply DLP rules across the board. You can be strategic, putting the strongest safeguards in place where the most sensitive data travels and focusing on the actions most likely to cause accidental leaks.

DLP Policies Can be Applied to the Following Locations

  • Exchange email
  • SharePoint sites
  • OneDrive accounts
  • Teams chat and channel messages
  • Windows 10, 11 and macOS Devices
  • Microsoft Defender for Cloud Apps
  • On-premises repositories

Related article: Creating DLP Policies

Setting Up DLP Policies in Office 365 – Step-by-Step Guide:

  1. Sign in to the Microsoft 365 admin center using your admin credentials.
  2.  In the navigation pane, select Security & Compliance.
  3. Select the Data Governance tab and then select Data loss prevention.
  4. Select the + Create a policy button to create a new DLP policy.
  5. Give the policy a name and a brief description.
  6. Select the types of sensitive information you want to protect, such as credit card numbers, Social Security numbers, and more.
  7. Select the locations where the DLP policy should be applied, such as SharePoint, OneDrive, Exchange, and more.
  8. Select the actions that should be taken when a DLP policy is triggered. These actions might include blocking the action, allowing it with a warning, or allowing it with an override.
  9. Once the DLP policy is created, you can test it by simulating a policy violation and reviewing the results.
  10. Review and update the DLP policies as needed. Do this to ensure they are effective in protecting your organization’s sensitive data.

Case Studies and Best Practices

Case Study #1: The Healthcare Provider and Accidental Exposure

The Challenge: A busy medical practice was struggling with patient records accidentally being sent to the wrong people – think typos in email addresses or mix-ups with similarly named patients. They needed safeguards in place before compliance issues arose.

The DLP Solution: They implemented Office 365 DLP policies to scan for keywords related to medical terms, patient IDs, and other personally identifiable health information. DLP was set to block emails containing this data going to outside addresses and to warn the sender about potential errors.

The Result: The immediate result was a drop in accidental data leaks. Plus, the practice was able to use DLP reporting to identify areas where staff might need additional training on handling sensitive patient information.

Case Study #2: The Financial Firm and Insider Risk

The Challenge: A financial services company was concerned about employees taking client lists or sensitive financial data when leaving the company for competitors.

The DLP Solution: Their DLP strategy focused on monitoring file sharing activity to unusual locations (like personal cloud storage) and data being transferred to USB drives. Employees received DLP policy alerts when these actions were attempted, and admins were notified for further review.

The Result: It acted as a powerful deterrent against intentional data theft, and the company could demonstrate a proactive approach to security during client audits.

Common Challenges & Solutions

False Positives: Sometimes, DLP is a bit too enthusiastic. Start with policies in “test” mode and monitor the results before enforcing hard blocks. This will help you fine-tune rules to avoid frustrating users.

Constant Updating: Data and regulations change! Regularly review your DLP policies with your stakeholders to ensure they still match the company’s needs.

User Education: DLP isn’t magic. Train your staff on what your company considers sensitive data and how to handle it properly. This is your first line of defense, even before the tech kicks in!

I’ve seen the impact of DLP firsthand. In a previous role, we discovered a well-meaning employee was regularly emailing reports with customer details to their personal account to work on at home. Totally harmless intention, but a big no-no! DLP caught it, we had a gentle chat, and thankfully avoided a major data breach.

Conclusion and Further Resources

Data loss prevention isn’t something you can “set and forget” within Office 365. It’s an ongoing process. You must understand your data. Then, adapt policies to new threats. You must work as a team to keep information safe. By taking the time to plan and implement DLP strategically, you’ll gain far more than just technological safeguards. You’ll build a culture of data awareness across your organization, which is the most powerful defense of all.

The tools within Office 365 provide a robust foundation. But remember, the real success lies in collaboration. Bring together your compliance experts, IT admins, business leaders, and everyday users. Together, you can craft a DLP strategy that effectively protects your company’s most valuable digital assets without hindering the work that needs to get done.

See which licenses include Teams DLP here.

Learn more about Teams DLP here.


  • Dee Begly

    Dee Begley is an internationally recognized expert on business communications, cybersecurity technologies, and compliance. She has two decades experience with cybersecurity strategy, compliance, and technologies.