Data residency
Definition
Data residency refers to the physical or geographic location where an organisation’s data is stored and processed. It is often influenced by regulatory, contractual, or policy requirements that dictate whether data must remain within a specific country or region. Businesses handling personal, financial, or sensitive information must consider data residency to comply with legal obligations and customer expectations.
For example, an Australian business collecting customer data may be required to store it on servers located in Australia to meet privacy and security standards set by regulators or clients.
Advanced
Data residency is often tied to data sovereignty, which concerns the laws governing data in the country where it is stored. Different jurisdictions impose varying requirements. In Australia, the Privacy Act 1988 and Australian Privacy Principles include obligations for cross-border disclosure of personal information. In the European Union, GDPR imposes strict rules on transferring data outside of member states.
Advanced strategies involve selecting cloud providers with regional data centres, drafting contractual clauses for international transfers, and conducting risk assessments on third-party data storage. Businesses must balance compliance, performance, and cost, especially when operating globally. Emerging frameworks, such as data localisation requirements in certain countries, are adding further complexity.
Why it matters
Use cases
Metrics
Issues
Example
A financial services firm in Australia uses a global cloud provider but specifies that all customer data must be hosted in Sydney data centres. This ensures compliance with local privacy requirements and reassures clients about the security of their personal information.