AI governance and data protection

What is data residency? Definition and examples

Also: Regional processing

In short

Data residency defines in which region data is stored and processed, for example only in Switzerland or the EU. It governs location, not automatically access: data in Europe can still be reachable for support teams or authorities in other countries.

Why it matters: You can tell customers and authorities clearly where their data is and who can access it.

Location

Where data is stored and processed

Access

Who can reach it, and from where

Data residency settles location, not access.

Why does Data residency matter for your company?

Many customers in Switzerland and Germany require their data to stay in Europe. Data protection laws only allow transfers abroad where adequate protection exists or extra safeguards are agreed: in the EU under the GDPR, in Switzerland under the revFADP.

Location and access are two separate questions. A data centre in Frankfurt or Zurich helps little if support, operations or the parent company can access it from another jurisdiction. Clarify both, and with AI providers also ask where the model itself runs.

Example: Stored in the EU, processed in the US

An AI tool advertises storage in the EU. The security review shows: the documents sit in Frankfurt, but model requests run through data centres in the US. For your Strategy 2027 with its focus on DACH mid-market customers that is a problem, because these are exactly the customers who ask.

The company requires regional processing for both storage and model calls and settles access from third countries in the contract. In customer conversations there is now a clear answer on location and access.

3 common mistakes to avoid

  • Confusing storage with processing

    Data can sit in Europe and still be processed elsewhere. Ask about both.

  • Forgetting access

    Location says nothing about who can access the data. Support and the parent company belong in the review.

  • Overlooking backups and logs

    Copies in backups, logs or monitoring often sit in other regions. They count just as much.

Step by step

  1. 1

    Clarify the requirements

    Check what customers, contracts and laws require about where data is held.

  2. 2

    Trace the data flows

    Record where data is stored, where it is processed and where it is backed up.

  3. 3

    Fix the region in writing

    Set the region in the contract or DPA, including sub-processors.

  4. 4

    Govern access

    Settle who may access the data from which country and how you will find out.

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