Data loss is one of the leading causes of disruption for businesses, and financially the most damaging. Many companies rely on critical data to function day-to-day, so a sudden loss can massively damage profits, productivity, and brand reputation.
Data loss doesn’t necessarily mean the total loss of all files. A single critical file being corrupted could undermine core operations. A larger loss – caused by a power outage or a ransomware attack – could pose an impossible problem, particularly for smaller organisations with limited resources.
It is challenging to calculate the cost of a data loss because every incident affects businesses differently. While there are immediate financial problems due to downtime while critical data is missing, there can also be a long-term effect as customers migrate to competitors. A study in 2018 by the respected Ponemon Institute revealed the average cost of a data loss was £2.9 million. Other research has suggested that, on average, businesses lose £5,990 per minute during a data loss event. While these are estimates, it’s clear that, whether your business is a large corporation or SME, the financial losses can be catastrophic.
The economic effect of a loss of data depends on several factors, such as the size of the business and the type of lost information. A data loss without active recovery options will cause the most problems:
Poor productivity: with employees unable to carry out their everyday work, productivity slumps, but wages still need to be paid, even if you’re compelled to send staff home. Time and resources must be allocated to recreate lost files, disrupting normal operations.
Decreased revenue: if a data loss causes sales to cease, the fall in income can be immediate. Many businesses have already experienced a sudden loss of income during the Covid-19 lockdowns. However, with a data loss event, there are no Government support schemes to subsidise the business or cover overheads.
Regulatory fines: the loss of sensitive data contravenes regulations in the UK and can result in penalties from the Information Commissioner’s Office.
Damaged reputation: a business’s inability to provide its usual service can cause customers to go to competitors instead. Reputational damage is difficult to measure precisely, but there’s no denying the damage resulting from a long-term loss of consumer confidence.
TMB Group’s backup services ensure you can quickly recover critical files and applications if disaster strikes. For more information, get in touch with one of our data security specialists today.
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