How Much Could A Data Loss Cost Your Business?

When you are dealing with an unexpected data loss of within a company the effect and severity of the data loss will of course depend on a number of factors, these being which system has failed, what data has been lost, how many employees are accessing the data on a hourly basis.

If a main raid server has gone down and this is used to house the company’s customer relationship management software then quite literally business can stop , especially if the CRM system is principally used for sales or the company employs a large sales force.

The effect of a data loss will affect companies in different degrees so a larger corporation may suffer from a great cost due to the loss but a smaller company may struggle to survive the effects or may simply not have the cash flow in place to cope with a potentially very expensive recovery.

With the ever increasing reliance on IT most business owners will have started to become reasonably educated about the need for a disaster recovery plan for their business, and plans may have already been put in place but this does not make the system infallible as if the plan has note yet been tested, or has not been implemented which often happens if a business waits for suitable window if a server needs upgrading for example, then the company will still be open to risk.

So what is the cost of a data loss disaster? This is a question often asked by smaller business as they need to establish a sensible return on investment in order to justify the cost of setting up a plan. Unfortunately the return of investment is a negative one in most cases, that is unless there is a data emergency,  then there will be no return on investment. There will on the other side of the coin though be a large risk reduction. A good measure that could be used for a sales organisation though could be loss of potential sales.

This can be a useful yard stick to justify the return of investment in a business continuity plan so for example if a business was clearing only 2k in sales per hour then a days downtime could result in a gross loss of 16k in sales alone.

Cost of lost sales is only one of the aspects that can be measured but other costs need to be taken into consideration as well many of which can be swept under the table if not factored. These could include the actual cost of employing a data recovery company in the first place or even punitive fines for missing contractual deadlines depending on what industry your business is in.

As well as measurable costs a company also need to factor intangibles into any return on investment or risk reduction calculation. Typical factors here could include activities such as re-population of customer CRM systems, additional management costs and business costs of running temporary as opposed to automated IT systems etc.

Another crucial factor that needs to be taken into account during any data emergency is the sheer value of your company data, it is often extremely tempting to follow the path of least resistance and least cost by asking you IT department to try and rectify the situation, unfortunately history has shown that the chances of corrupting data even further are very high unless your IT department employs a data or raid recovery specialist.

Also if you are employing the services of one of the  data recovery services companies you need to check their potential methodology and ensure they will not work on the actual donor disks as it is crucial to keep the main data source intact at all times.

Specialist business continuity providers will have strict protocols in place to ensure the absolute integrity of the source data. Working on the original data hard drives should simply not be an option because if the file structure or data is compromised in any way then your business could experience total data loss.

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