Offline files are stored local copies of network files provided so that you may work with certain types of information when you're offline or disconnected from the network. These files are not encrypted by default, but you can enable a new feature in Windows 7 that provides this added safety measure.

File encryption provides another level of access protection that-like EFS-operates independently of NTFS permissions. This safeguards your files in the event your drive is removed or the entire system is stolen. You should especially encrypt offline files if you suspect they will contain confidential, private, or sensitive information.

You can enable encryption of offline files by clicking the Encrypt button on the Encryption tab of the Offline Files dialog box. To encrypt offline files, you must first enable offline files on the General tab of a given folder or launch Manage Offline Files from the Start menu using the Search box.

When encryption is enabled, the Encrypt button will be grayed out and only the Unencrypt button will be active.