Cost of Data Loss

What is Data loss?

When your data suddenly becomes inaccessible, a data loss is said to have occurred. A data loss can be caused by several factors. Most studies indicate that human error is one of the biggest reasons for data loss. Accidental deletion, handling the data inappropriately, not creating regular manual backups are some of the reasons why data loss occurs due to human errors. Software corruption, virus or hacker attack, and hardware errors are the other reasons cited for data loss.

Consequences of Data Loss

Data loss can create a huge havoc unless a business is adequately protected. Businesses these days have to be extremely efficient. Not only do they have to ensure that the work and transactions occur in a timely manner, but they also have to ensure that their company is able to do in the most financially viable manner.

Data loss can adversely affect both these business objectives. A data loss incident means lost business time and time is literally money. According to recent studies, on an average, recreating 20 MB of data requires approximately 30 hours. This would make you think that companies understand the importance of data loss. However, facts tell us quite the opposite.

Research indicates that 99% of all businesses do not perform daily backups. In addition, approximately 60% of all the data backups are incomplete. The consequences of data loss can be very severe. Recent studies have proved that by the 6th day of a major data loss event, a company is likely to lose 25% of its daily revenue. In addition, 43% of the companies that do not have an adequate data backup and recovery plan in place, shutdown after the data loss incident. Therefore, data loss is one of the major reasons why companies go bankrupt.

Cost of Data Loss

Data loss can spell very bad news for a business if it does not have appropriate disaster management systems. According to recent studies, an average UK Small and Medium Enterprise loses approximately £843 due to data loss caused by virus attack. In addition, the average downtime experienced by the companies is 7.2 hours. Let us analyze some of the costs associated with data loss.

    * Cost of Continuing the Business Without the Data

One of the most important assets of the company that is not listed on the balance sheet is the company\u2019s data. Records, transactions, or strategies can be an integral part of the company\u2019s database. Imagine a bank representative trying to serve its customer without having any information about the customer\u2019s account. In all probability, the representative will not be able to serve the customer.

How do you go about explaining an irate customer about the data loss problem? Your company will probably try to use all its resources, financial and human, to continue the business in whatever way with the limited means. The company may have to inform its customers as well as clients about the data loss problem and its inability to serve them, as they would have under normal circumstances. If the data loss problem turns out to be a permanent one, the company may have to spend several weeks or months before normal business operations can be restored.

    * Cost of Recreating the Data

If you are not able to recover your data, you will have to recreate it. Therefore, your physical resources will be directed towards recreating the data. In addition, your employees will also be directing their time and energy in recreating this data.

Under normal circumstances, your resources including your employees would be engaged in creating new business or profits. On the other hand, in a data loss situation, your resources will be trying to minimize the losses without adding any value to the business. The productivity of the company and the employees will be affected due to downtime.

Your company may lose future contracts and if there are any projects in the pipeline, they are likely to get delayed. Therefore, besides the direct losses associated with business downtime, there are indirect losses associated with recreating data in the event of data loss.

    * Cost of Data Recovery

Data recovery can be an expensive and time-consuming process. If the data loss problem is severe, the recovery can be very expensive. Data recovery can sometimes take days or even weeks. If your company has had a major data loss problem affecting various computers, the cost of data loss can be huge.