# Data Residency

> Data residency refers to the geographic location where data is stored and processed, and to requirements that keep it within a particular country or region. Requirements can come from laws, industry regulations, contracts or customer expectations. For AI systems, residency applies to stored documents, vector databases, logs and backups, and also to where model inference runs.

## Why it matters for your business

A company may promise customers or regulators that data stays in the United States or the European Union, and AI tools can quietly break that promise if prompts, files or logs are processed elsewhere. Before choosing an AI provider or automation platform, check where each component stores and processes data, whether you can select a region, and which subprocessors are involved. Government contractors, healthcare organizations and companies serving EU customers tend to face the most explicit requirements. Self-hosting and region-specific cloud deployments are common ways to meet strict residency needs.

## Example

A software company selling to European customers commits in its contracts to process their data in the EU. When adding an AI support assistant, it uses its cloud provider's EU region for the vector database and logs, selects a model deployment that runs in an EU region, and documents each subprocessor and location for customers' security reviews.

Related terms: https://www.lumeor.studio/glossary/self-hosting/, https://www.lumeor.studio/glossary/zero-data-retention/, https://www.lumeor.studio/glossary/ai-governance/, https://www.lumeor.studio/glossary/baa-business-associate-agreement/

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Source: https://www.lumeor.studio/glossary/data-residency/