How does encryption enhance data security?

Encryption enhances data security primarily by protecting data from unauthorized access during transmission or while stored. When data is encrypted, it is transformed into a coded format that can only be read by someone who possesses the correct decryption key. This means that even if an unauthorized individual intercepts the data during transmission or gains access to it while it's stored, they will not be able to make sense of it without the key, thus safeguarding the confidentiality and integrity of the information.

In the context of data security, the use of encryption is critical because it mitigates risks associated with data breaches, unauthorized disclosures, and cyber attacks. Organizations use encryption to comply with regulatory requirements and to maintain the trust of their customers and stakeholders by ensuring that sensitive information, such as personal details and financial records, remains private.

The other options do not directly address the function of encryption in relation to data security. While reducing file sizes, improving system performance, or increasing user access levels may have their own advantages in different contexts, they are not related to the specific security function that encryption provides.