Calculating the Cost of Data Loss


By Jeff Whitaker, Sr. Cloud Solutions Marketing Manager, NetApp & Yaron Haimsohn, Cloud Solution Architect, NetApp


The term “data loss” sounds ominous, yet also vague. “Data” isn’t easily quantifiable, and neither is “loss.” However, you can actually put a cash value on the cost of a lost record. That cash value can be very high as a result of regulatory penalties, customer turnover, and reputational damage. This article details the financial and other costs of data loss and provides advice on how you can avoid losing data.


The Dollar Value of Data Loss

At the end of May 2015, the Ponemon Institute released its annual “Cost of Data Breach Study.” Researchers estimated that the average cost of each lost or stolen record containing sensitive and confidential information was $154. That cost rose $9 from the 2014 study.


The cost of a lost or stolen record varies by industry. On average, the cost of such a record containing healthcare information is $363. In contrast, a lost or stolen credit card record has a significantly lower cost. The credit card company can easily and quickly close a customer’s account if his or her card is lost or stolen. Healthcare information has a much longer shelf life. Those records contain data that can’t be modified or deleted, so they can be used for long periods of time.


The figures just mentioned don’t include the cost of regulatory fines and penalties associated with data loss. In the United States, the Sarbanes-Oxley Act of 2002 (known as SOX) mandates that certain records be stored for set periods of time. If a business does not comply, it faces fines. The company’s executives can also go to jail for noncompliance with SOX.


The Other Costs of Data Loss

The financial cost of data loss is the easiest for business leaders to understand. This cost represents a negative impact on a company’s bottom line.


Other costs associated with data loss don’t have a clear price tag. If a firm does not back up its digital information properly and then those repositories are destroyed in a manmade or natural disaster, customer trust in that business will be shattered. Clients will feel that they cannot rely on the company to properly protect their valuable confidential data. They will turn to another firm that can.


Preventing Data Loss

Data loss doesn’t have to be a fact of life. Businesses can take steps to prevent data loss. One step is to replicate and store information at a remote site so that it is accessible in an emergency.


At the end of October 2012, Hurricane Sandy slammed into the East Coast, resulting in massive flooding, power outages, and transportation shortages, among other issues. Firms that didn’t replicate and store their information in remote data centers could not operate. Companies that relied on remote data centers survived.


In a March 2013 interview with The Data Center Journal, digital storage expert Dr. Alex Winokur pointed out that a hurricane is one of the more drastic justifications for a remote data center. A firm can be stricken by a fire, software bugs, hackers, or hardware failures. These events are equally good reasons for replicating and storing data remotely.


The Benefits of a Remote Data Center

There are some obvious advantages to using a remote data center. In the event of a disaster, corporate and customer data will remain secure. There is also another, less obvious benefit.


The use of a remote data center can bolster a firm’s reputation as being trustworthy and reliable. Customers know that their data is safe and accessible and that they can count on the company to continue operating and meeting their needs no matter what happens to its primary facility. As a result, customers continue doing business with that organization.


NetApp: Effective, Reliable Disaster Recovery Solutions

Disaster recovery planning is crucial to avoiding data loss and damaging a company’s reputation. The NetApp® Data ONTAP® operating system helps companies recover quickly from a system, site, or regional outage by increasing storage availability, leveraging disaster recovery infrastructure for testing, and improving operational efficiency.


For more information on disaster recovery, download the new paper, Budgeting for a Disaster: 7 Cost-Savings Tips for Disaster Recovery.


Budgeting for a Disaster

NetApp Staff

1 comment