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The True Cost of Data Loss

By: Jill Newtran


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There was a time when only the IT or IT-related businesses needed to rely heavily on data. But now, there are no commercial organizations from a global IT giant to a humble corner shop that do not need their data to remain intact. Let us now concentrate only on business users and how they are affected by data loss.

What is Data Loss?

When digitally stored information is lost or corrupted or access is denied to its owner, we can call it a case of data loss. This can be caused by a hardware flaw, for example, if the read or write head stops working, your hard disk will crash or not respond to your commands. The data inside this disk is then lost till the rightful owner can gain access to it. Again, a virus attack can corrupt files stored in a company server or a hacker might gain access to it and steal the files. The server will then crash or the files will fail to open. This, too, is a case of data loss. Sometimes, data loss can be caused unwillingly by the user himself or herself. Accidental deletion or formatting of drive is a typical example of this kind of data loss. Then again, data loss can be caused through sheer ignorance. Most people pull out a USB device with the programmes still running. In the process, they may cause data stored on the device to be lost. This is because they simply do not know of the existence of the safe removal option.

Consequences of Data Loss

The consequences of data loss can be quite severe. It may be pointed out here that many of the companies that are not prepared to deal with a data loss situation do not reopen. SMEs and home businesses in the UK have seen a boom with the coming of the IT wave, but then many of them have been thrown out of gear due to crippling data loss incidents as well. Below are some of the consequences of data loss:

  • Data loss can cause a business to shut down if it is data-dependent or the data lost had been very sensitive or rare. Those businesses that depend on certain kind of data for their day-to-day operations will obviously be in a bad state if their very livelihood disappears from them.


  • Data loss always causes financial loss in some way or the other. One has to pay the downtime, get the data back again, try to recover it, pay people while nothing is being done – some companies had to file for bankruptcy after data loss. This may or may not appear to be the direct reason then, but it is definitely a bad influence on company finances if data is lost.


  • Downtime has been a growing concern with companies that have lost data in the past. Almost all companies of every size and job type is waking up to this now. Whether they have work or not, your employees will continue to turn up at office, and you will have to pay them while data is being recovered. Important opportunities may be missed or snapped up by eagerly waiting competitors in the meantime. The infrastructure cost will have to be paid and the same applies to all the bills and maintenance charges.


  • Negative publicity is a very important aspect of data loss. Many companies have had the foolishness of trying to keep mum about major data goof-ups. Any data loss that affects the public in general will leak out as tasty news sooner or later. This will make the company look much worse and not even the global leaders in certain fields have been spared of this.


  • Loss of customers is an obvious fall-out of the above mentioned points. Irate clients will shift elsewhere with their business, work less with the firm concerned, and definitely not recommend it ever again. This is the worst way in which a business can be affected in the long run.


Bankruptcy Due to Data Loss

The above points clearly show why companies can go bankrupt after a data loss event. It is best to come clean in such cases and make a full declaration.

Calculating the Losses

While calculating the cost of data loss, downtime, employee wages, bills, infrastructure and staff maintenance, recovery costs, media costs and the cost to recreate the data need to be considered. If a professional data recovery firm is called in, they will have to be paid too.

More Articles: http://www.article-library.net

James Walsh is a freelance writer and copy editor. If you are concerned about data loss and would like more information on Data Recovery see www.fields-data-recovery.co.uk



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