What does 'data sensitivity' refer to in risk assessments?

Data sensitivity refers to the importance and potential impact of data in risk assessments. Assessing the sensitivity of data helps organizations determine how critical the data is, what the implications could be if it were compromised, and what specific measures might need to be put in place to protect it. This understanding lays the groundwork for establishing appropriate security controls, regulatory compliance, and data protection strategies.

When organizations evaluate data sensitivity, they typically consider factors such as legal and regulatory requirements, the potential for reputational damage, financial loss, and the harm that could come to individuals or entities as a result of data exposure or misuse. Therefore, option B captures the essence of how data sensitivity is central to identifying and managing risk in any organization.