Data classification is the process of organizing data into categories for its most effective and efficient use. This practice helps organizations manage their data by identifying sensitive information and applying appropriate security measures. By classifying data, businesses can ensure compliance with regulations and protect against data breaches. There are various methods of data classification, including manual classification, where individuals categorize data based on predefined criteria, and automated classification, which uses algorithms to sort data. Effective data classification not only enhances data security but also improves data retrieval and analysis, leading to better decision-making.