What is the true cost of lost data to business?

Impact of Data Loss on a Business

There is a certain sweat inducing twist in the stomach that is reserved solely for the moment any individual realises they have just lost digital data to…well, to wherever that seemingly priceless information disappears after the combustion of a hard drive or a misplaced, absent minded tap of the delete key.  

Here we explain the consequences of data loss for businesses, and how to keep your data safe and secure. 

It would be fairly accurate to say that all computer users will have had their own experiences with data loss at some time or other. In many personal cases, the loss is relatively inconsequential and can be reinstated with a few minutes of aggravated re-typing. However, with the amount of business data being stored digitally rising to record levels and our reliance on that data becoming critical, mass business data loss can quite easily go beyond gut wrenching to business ending.

A study carried out by the British Chambers of Commerce found that 93% of businesses that suffer data loss for more than 10 days file for bankruptcy within one year, and 50% do so immediately. 

Business data loss can, of course, be caused by several factors, the main one remaining hardware malfunction. There are not many certainties in life but one is that hard drives will eventually fail. In fact, a hard drive dies every 15 seconds. Other main causes of data loss are employee negligence, including misplacing of USB sticks and laptops, software corruption, viruses, natural disasters and, increasingly, hacking.

So what are the true costs of business data loss?

According to research compiled by IBM and the Ponemon Institute, the average cost of a data breach globally is £4.35 million, or $164 (£128) per record.  

The IBM/Ponemon report confirmed that in 2022, the cost of a business data breach in the UK rose 8.1%, and the UK is now 4th in the business data loss league table behind the US, the Middle East and Canada. The impact of data loss on businesses goes beyond just these costs, to include the direct fallout after the data loss, such as the clearing up process and replacement of equipment, as well as investigations into the incident and the efforts to rebuild customer trust.

Not enough businesses backing up

It seems that there remains a very definite gap between the realities of business data loss and organisations employing solutions to counter the problem. According to a study carried out by the global market intelligence firm IDC, 40% of SMEs don’t back up their data at all. When they do, 40-50% of those backups are not fully recoverable. IDC also found that 60% of all business data is held on PC desktops and laptops. This means that it usually won’t get backed up as part of regular company server backups.

The solutions to the costs of business data loss

It may surprise you by how some businesses, large or small, are still not investing enough in their data backup systems. 96% of businesses do not back up their workstations, and 75% of small businesses do not have a disaster recovery plan (IDC figures – commissioned by Zerto).   

However, businesses can significantly mitigate the impact and cost of data loss with an effective data backup solution and disaster recovery plan. In a world of advancing online storage solutions in which data can be backed up to the cloud, protecting data is, easier than ever. No longer is there a need for tape or disk-based backups which work with fragile hardware, as well as requiring vigilance from the operator to make sure the hardware is regularly changed. These days, data can be seamlessly delivered via the web to highly secure servers to be held until the day comes when it is required. The size, scope, and sensitivity of the data that your business deals with will dictate the type of backup system you use. With that in mind, it’s important to determine the scope of your dataset and how often you will need to back data up before deciding which data backup solution to choose. When it comes to building a robust disaster recovery plan, some key steps that you should consider are: 

• Conducting a thorough risk assessment 
• Evaluating critical needs 
• Setting objectives 
• Collecting data and drafting a written plan 
• Creating a standardised communication strategy 
• Creating a backup plan 
• Testing and revising 

Of course, in all of this it is crucial to communicate the plan with your employees and assign key roles and responsibilities to ensure everyone knows who is responsible for what, this will help save time and enable a rapid response.