Passwords for encrypted hard drives can be easily extracted from a laptop's RAM chip

With recent cases of mass personal data going astray, many organisations, particularly in the public sector, have banned the removal of laptops from their normal locations until the data directories on laptop hard drives have been encrypted.

Here - the abstract is below - is a clear and convincing 5 minute video and paper from Princeton University's Center for Information Technology Policy by J. Alex Halderman, Seth D. Schoen, Nadia Heninger, William Clarkson, William Paul, Joseph A. Calandrino, Ariel J. Feldman, Jacob Appelbaum, and Edward W. Felten, describing a common set of circumstances under which the password for the encrypted data can be extracted from the laptop, rendering the data easily available.

Contrary to popular assumption, DRAMs used in most modern computers retain their contents for seconds to minutes after power is lost, even at operating temperatures and even if removed from a motherboard. Although DRAMs become less reliable when they are not refreshed, they are not immediately erased, and their contents persist sufficiently for malicious (or forensic) acquisition of usable full-system memory images. We show that this phenomenon limits the ability of an operating system to protect cryptographic key material from an attacker with physical access. We use cold reboots to mount attacks on popular disk encryption systems — BitLocker, FileVault, dm-crypt, and TrueCrypt — using no special devices or materials. We experimentally characterize the extent and predictability of memory remanence and report that remanence times can be increased dramatically with simple techniques.