Impact Of Severe Data Loss On Companies

By Author: James Walsh
Total Articles: 68
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The role of data as a precursor, generator and sustainer of business is surely undeniable in today's business world. Physical assets are being replaced by virtual assets and any possible data loss disaster may portend doom for a company, so far as its survival is concerned. A data loss may occur due to a variety of reasons. The most common cause is hardware failure, which accounts for approximately 40 percent of all data loss incidents. The next biggest culprit is human error, responsible for about 29 percent of all data loss disasters. Computer viruses contribute a figure of 6 percent to this statistics. 13 percent of data loss incidents occur due to software corruption. Theft and hardware lead to about 12 percent of all data loss incidents.

Data loss may not only lead to massive losses in terms of time and money, but may threaten the very existence of a company, bringing it on its knees. If we go beyond the quantifiable assets like time and money and take into consideration, the intangible assets like credibility and good will, customer loyalty and organizational moral in this era of Brand Appeal and Concept Marketing, ...
... the magnitude of a severe data loss scenario may soar way beyond our realistic expectations. In modern business organizations, all aspects of commercial activity are computerized and there exists a high level of interdependence amongst various departments, so far as sharing and use of data is concerned. Thus any potential data loss disaster may paralyze a firm at all the levels, giving way to a situation of chaos, both within and outside the company. The situation may get further aggravated, if a company facing a severe data loss situation does not have any backup or recovery plan in place. This will lead to an irretrievable loss of valuable data and perhaps the survival of the company may become a bleak possibility. A cursory perusal of some related statistics may help us understand the things in a better way.

As per a recent survey, the monetary cost of data loss to a company can not be ignored. A data loss often leads to a shutdown and the companies have to bear all the resulting expenses. 46 percent of the companies stated that a downtime of one hour will cost them about $50,000. 18 percent estimated this figure to approximately $ 251,000 to $1 million. A considerable 8 percent declared that they may have to suffer losses to the tune of more than $1 million, per hour of downtime. The same survey attempted to estimate the impact of a shut down owing to data loss, on the survival of a company. 40 percent of the companies estimated these levels to be at about 72 hours. 3 percent of the companies calculated this limit to be about an hour. A startling 4 percent revealed that they may have to file for bankruptcy, within an hour of a major data loss disaster. According to one other survey, a company may have to bear a loss in daily revenue to the tune of 25 percent, by the 6th day of a data loss disaster. 43 percent of the companies faced with a data loss situation may simply bleed to death. Businesses may expect to suffer a fall of 8 percent in their stock price and customer percentage, on the very first day of reporting a data loss incident. Larger companies may expect these losses to be more than 12 percent. The value of one MB of data is estimated to be about $10,000. Considering these figures, it is not hard to understand the implications of a severe data loss on the survival and well being of a company.

Hence it is evident that many of the companies facing a severe data loss may not survive. To avoid this predicament, companies need to invest in back up and data recovery facilities. Precautions against virus attacks need to be placed well in time and stringent protocols should be designed to regulate the access to and usage of sensitive data.

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 http://www.fields-data-recovery.co.uk