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Encryption is a method of encoding information so that only individuals with the correct key can decipher it, rendering the data unintelligible to others. Sensitive information, which can cause serious consequences if compromised, includes grant applications, intellectual property, personally identifiable information (PII), performance ratings, and financial data. Encryption is necessary when transmitting sensitive data, such as through email, and when storing it on devices like laptops, smartphones, servers, or USB drives. It ensures the confidentiality and integrity of sensitive information during transmission and storage.