Asset classification is a systematic security process that involves categorizing an organization's assets based on their sensitivity, criticality, and business value. This foundational practice encompasses the identification and assessment of all information assets, physical infrastructure, software, and human resources, assigning them specific classification levels such as public, internal, confidential, or restricted. These classifications are determined by factors including regulatory requirements, proprietary value, and the potential reputational or operational damage that could result from unauthorized exposure or compromise.

This strategic categorization ensures that security controls, data protection mechanisms, and access policies are proportionate to each asset's importance. Highly critical assets containing sensitive data receive the most stringent safeguards, which directly informs incident response priorities and vulnerability management efforts. By implementing robust asset classification, security teams can optimize resource allocation, focus threat detection capabilities on high-value targets, and align mitigation strategies with the organization's overall risk appetite—making it an indispensable component for maintaining compliance and building resilience against evolving cyber threats.