cost of data loss

What is Data Loss?

Loss of data from your computer or from other data storage devices can occur in many ways. Some of them are:

• Physical damage to the data storage medium due to natural and man-made disasters such as fire, earthquake, flood etc.



• Another reason for loss of data can be viruses that make the data inaccessible or overwrite the existing data.



• Power surges or failure of storage media can lead to loss of data.



• Corruption of data can occur due to the use of faulty software.

Importance of Digital Data in Firms and Organisations

• Today most of the correspondence that is carried out between two companies or between a company and its clients is through the means of emails. The same needs to be stored for future reference and it is stored in the digital form.



• Also, in order to make the data available to all the departments within a company, many companies adopt the strategy of sharing it over the local network. Thus, the data is present on a single computer or server within the company and is made available to all others.



• In case of organisations such as banks, all the transactions with customers are stored in digital form. Also, the digital database serves as a platform for many schemes such as internet banking.



• Digital data helps in developing advertising strategies for a company. Marketing through emails has become popular over the past few years. The same requires a database of potential clients for the firm.

Consequences of Data Loss

Loss of data can have serious effects on a company depending on how it functions and the importance of computers in its day-t-day activities. Let us have a look at some of the examples that will help us to better understand the scenario.

• Consider the above situation of a bank, if some of the data present in the customer database is lost then, the internet banking system cannot function properly. Also, the functioning of all various branches of the bank will be paralysed as the tellers refer to the digital data in order to carry out transactions.



• If a company lets the clients secure its services by means of emails, the loss of data could lead to losing out on those clients.



• Some of the organisations may make their employees work in shifts (for example, hospitals). If the data is lost then the functioning of the organisation will be seriously affected.



• The salaries, holiday schedules etc. of a company’s employees is usually handled by means of software. Loss of the same may result in a debacle.



• Most of the data regarding the research for the upcoming strategies that a company has carried out is stored in the digital form. Loss of important data may foil the new ideas of the company.



• In some of the cases, a part or whole of the lost data cannot be recovered at all. Even if the data can be recovered, the process of data recovery is time consuming and during that period of time, the functioning of the organisation will be jeopardised.

Cost of Data Loss

It can be seen that loss of data tends to be expensive affair. Let us have a look at the measures that a company will have to undertake after an incident of data loss that will help to determine the cost caused by the damage.

• The first thing to be done is to determine the amount of data that has been lost and determine the importance of the same.



• Next, the company can try to function without making use of the lost data. The same is impossible in many cases of data loss on a large scale.



• On the other hand, the company can try to recreate the lost data. For example, the company has lost the list of the type of services that it has to perform for a particular group of clients then it can contact the clients and try to obtain the same.



• In most of the cases, if a company has suffered from data loss on a large scale then it hires the services of a data recovery company and tries to continue work without the data in the meantime.

The cost of the damage can be calculated based on all the criteria given above. It is the total loss occurring in the business due to the loss of data together with the cost spent towards recovering the same.

In most of the cases, the cost of damage is immense and a lot of companies find it difficult to resume the business after these incidents. Hence it is always a wise option to be prepared for loss of data by backing up of important information in order to avoid serious consequences.