What is Data Loss, Its Causes, and its Impact on a Business

data loss

Data loss is the bane for businesses of all shapes and sizes. Losing critical data means investing considerable resources to recover it. Data loss usually happens when you accidentally delete the files, become corrupted, or cybercriminals hack into your IT network to steal them.

Impact of Data Loss on a Business

Data loss affects your business in multiple ways, including:


When your business suffers a data loss, you may need to spend hours or even days trying to recover it. Even after so much hassle, there is no guarantee that all the data will be recovered. In some cases, data loss is permanent, and organisations must redo all the work. Undoubtedly, it will impact organisational productivity. Without the data, some business functions may not be able to perform their work at all.

Reputational Damage

In today’s age, news travels fast. You are wrong if you think you can hide the data loss news from your stakeholders. Whether you try to hide the news or take responsibility, your business reputation will suffer in either case. Businesses spend hundreds of thousands of dollars to recover their image after data loss.

Confidential Information

Suppose a bank suffers a data loss due to a cyber-attack. What are the repercussions? The most obvious is the loss of confidential customer information, especially banking information. There are cases where such data loss has resulted in people losing their money as hackers used the stolen information to make purchases. Losing confidential information such as customer data or trade secrets can lead to unrecoverable losses.

Customer Loss

A common impact of data loss on businesses is customer loss. Customers prefer shopping with a business where they know their data is safe or the organisation has at least implemented robust measures to protect their data.

Business Closure

It is quite possible that your business may permanently shut down due to the impact of data loss. Every year, organisations are forced to close their doors due to the regulatory fines and legal costs associated with data loss.

Common Causes of Data Loss

There are several reasons for data loss, including:

Poor IT Asset Disposal Practices

Suppose the current organisational IT hardware does not support Windows 11 requirements for a trusted platform module. Therefore, you decide to replace older workstations with Windows 11-compatible ones. Most businesses back up the data, format the hard drive, and proceed to auction the obsolete hardware or sell it to a scrap dealer. What they don’t realise is that the data is still recoverable.

There are numerous cases worldwide where organisations have suffered due to this practice. There are dedicated IT Asset Disposal companies in Pakistan and elsewhere that specialise in safe and secure IT asset disposal. They ensure that no data is recoverable while the hardware is disposed of sustainably. In many countries, safe IT asset disposal is a regulatory requirement.

Human Error

Another common reason behind data loss is human error. Employees working at large multinationals have lost/misplaced their USBs containing trade secrets and other sensitive data. Last month, a Japanese man lost a USB containing an entire city’s personal information. There are also cases where employees left their workstations unlocked, and someone was able to steal the data. Employees have a habit of taking pictures at their workplace. At times, the picture may include their workstation, displaying sensitive information.

Virus & Malware

Viruses and malware (yes, they are different) can creep into your system if you don’t have the right security measures. They don’t take long before wreaking havoc on your systems. If your business largely depends on IT, the best approach is to hire an IT outsourcing company to install relevant security tools across all organisational computers.


Cybercriminals or IT security companies have a knack for finding vulnerabilities in even the most secure platforms. Apple widely touts its iPhone as the most secure phone in the world. Over the past few years, there have been numerous cases where the phone’s security was bypassed without the user even clicking on a link or doing anything else.

Hardware Malfunction

You may experience data loss due to hardware malfunction. For example, without routine maintenance, the hardware can begin to malfunction. Your hard disc may crash or burn, leading to data loss.

Software Corruption

Lastly, if you use pirated versions of Windows or any other software, it can corrupt your files.


Your organisation must implement a safe IT asset disposal process to avoid data loss. Secondly, there needs to be a comprehensive data protection policy to ensure data backup, security measures, and who has access to what kind of data. If you need an IT specialist company to scan your IT network for vulnerabilities, contact MITServices.

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