Defining a Disaster

The list of potential disasters facing a business is long and varied. Besides the obvious natural disasters, there are power failures, fire, water damage, explosion, sabotage, vandalism, or environmental problems, to name a few. Even if your equipment survives, what if your people can’t get to it? Labor strikes, transportation worker strikes, or even a blizzard that leaves your equipment untouched but cuts off access, can cause a business disaster.

Despite continuous improvements in computer equipment, hardware and software failures still account for nearly three-quarters of all business interruptions and data loss or corruption. These failures include disk crashes, cabling problems, and operating system or application breakdowns. If you’ve never taken the time to consider the true cost of a business disaster - and most people haven’t - you may find the costs associated with recreating data staggering.

And There’s More... Shareholders - Shareholders are becoming more aggressive in their pursuit of high returns for their investment. For some, this will mean pressuring the board of directors to oust their chairman of the company’s chief executive officer. Following a disaster that has a severe negative impact on shareholder value, they may come looking for the responsible parties. Prosecution - There is the threat of prosecution. Did you meet your fiduciary responsibility to protect the corporate assets when you elected to ignore formal disaster recovery planning?

There are other very serious consequences to disasters. Businesses depend on computer systems for efficient operations, from the factory floor to the customer service center to the administrative offices. Consider just a few of the wide range of corporate functions that rely on computers: Payroll, sales and revenue data, order entry, billing, accounts receivable, accounts payable, inventory, and production control. An unplanned outage can bring any number of corporate operations to a sudden halt. 

In fact, studies find that nearly 90 percent of companies report that during a system failure they experience lost productivity, not to mention end-user management dissatisfaction, and perhaps most damaging, customer dissatisfaction. 

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