Sensitive file segregation involves separating critical or confidential data from less important files using distinct physical storage devices or strict logical access controls. This reduces risk by minimizing exposure and accidental access. It differs from general file organization by focusing on security rather than convenience, creating defined boundaries around sensitive information, such as client data, intellectual property, or financial records.

Common applications include isolating HR employee files containing personal identification information on a secured network share accessible only to authorized personnel, preventing broader company access. In healthcare, patient medical records are often segregated on specific servers with enhanced security protocols, separate from general administrative documents, ensuring compliance with regulations like HIPAA. Industries like finance, legal, and government heavily rely on this practice using access controls within file systems and cloud platforms.

The primary advantages are significantly improved data security and easier regulatory compliance. By restricting access points, breaches involving less critical systems won't automatically compromise sensitive data. Key limitations include added management complexity and potential workflow disruptions. While segregation is crucial, it must be part of a broader security strategy, including encryption and robust access management, to be fully effective. Neglecting these complementary measures undermines its protective value.