Why Is Data Loss So Serious?
Data Loss Can Completely Cripple Business Operations. In the event of extreme data loss such as the loss of an entire database, even temporarily, it is not uncommon for the impacted business processes to fail at multiple levels. The organization may be rendered helpless, unable to fulfill orders and struggling to update employee records. Producing financial reports and providing customer services may also be impossible.
This occurs because technology is the backbone of most business operations and most of these operations are connected through a central IT system. Therefore, any disruption to the IT system can affect other business areas such as phone systems and manufacturing processes. As a result, employees may be idled for prolonged periods of time while the lost data is being recovered. Productivity will suffer.
The Impact of Data Loss on Sales. Organizations can suffer significant harm when data loss makes it impossible to interact with customers, often resulting in lost sales. Since email is the primary channel of communication between organizations and their customers, if your email system were to go down, how difficult would it be for you to conduct business as usual? Any disruption in your communication with leads, prospects, or clients can translate into lost business. For instance, should you fail to submit a proposal or bid on time, the result would potentially be a major loss of projected revenue.
The same applies when a data breach is directed at a call center or CRM provider. This is particularly true for small businesses that rely on independent call centers for customer support assistance and Customer Relationship Management (CRM) providers for managing customer relationships. In a worst-case scenario, the harm resulting from an attack on either of these two might be enough to force a small organization into bankruptcy.
Data Loss Resulting from Theft. Data loss can also take the form of data theft where a hacker breaks into a computer or network and steals critical private business information. Business plans, product designs, and a variety of other mission-critical information can disappear. The economic impact of information theft is difficult to measure because the extent of the harm caused may only manifest itself over a long period of time.
Data theft often results in lawsuits, breaches of contracts, regulatory compliance failures, and loss of business.
Lawsuits and hefty fines typically go hand-in-hand when a company experiences data theft. As an example, if personal information such as names, addresses and financial account numbers are accessed by hackers, then organizations may find themselves embroiled in lengthy legal court battles.
Data thefts can also result in contract breaches and a variety of fines and lawsuits. Shareholders, for example, can sue an organization for failure to perform duties outlined in a contract. Customers can sue companies for direct and collateral damages resulting from a data theft that caused an order to be delayed or lost.
Regulatory Compliance Failures. In 2007, the State of Massachusetts Legislature passed 201 CMR 17.00, a comprehensive set of regulations addressing data breaches. Under these laws are a set of regulations that affect any business that collects and retains personal information of its customers. For the purpose of these regulations, “personal information” includes names, social security numbers, driver’s license numbers or financial account numbers, including credit or debit card numbers.
The regulations took effect January 1, 2010, and mandate that personal information – a combination of a name along with a Social Security number, bank account number, or credit card number – be encrypted when stored on portable devices, or transmitted wirelessly or on public networks. Additionally, the regulations call on organizations to utilize up-to-date firewall protection that creates an electronic gatekeeper between the data and the outside world and only permits authorized users to access or transmit data, according to preset rules.
Loss of business isn’t uncommon after data loss incidents especially if the loss was a result of a preventable event such as a security breach. Customers may feel that the company didn’t take adequate measures to safeguard their information and may therefore choose to discontinue doing business with the organization for fear of a similar event recurring in the future.
Data loss or theft can strike any organization. The wise choice is to be proactive by deploying an up-to-date and secure data backup system.
The main takeaway from these costly consequences of data loss is that businesses bear a huge responsibility for protecting the data they own. Failure to do so means facing serious operational and legal ramifications.
If you’re ready to get serious about protecting your business data, select a talented Managed IT Services/Managed Cloud Services company, like Bryley Systems, to help you double-check your IT infrastructure, recommend solutions to eliminate weak links in your security chain, and help you develop an organization-wide policy to help prevent data loss. Please contact us at 978.562.6077 or by email at ITExperts@Bryley.com. We’re here to help.