According to a Forrester study, only 2 percent of companies could restart operations within an hour of a disaster incident. Additionally, based on Gartner calculations, the average cost of IT downtime is $5,600 per minute or $300,000 per hour. In short, pairing a major IT disruption with a poorly designed or reactive disaster recovery plan can result in a perfect storm that could cripple your business and have ripple effects for years to come.
Commonly used interchangeably with business continuity planning, disaster recovery (DR) planning is actually a related, but different concept. A business continuity plan is an overarching strategy to maintain functionality of mission-critical operations; an IT DR plan focuses on how an organization can regain stability following an impact to databases, applications, networks, hardware, and similar systems.
So, just what is potentially at stake when your organization is left standing flat-footed when disaster strikes? This article explores some of the obvious and not-so-obvious impacts to your brand.
News can travel quickly, especially in the case of a security event or other operational disruption. As customers and suppliers run into roadblocks trying to communicate with your organization and employees scramble for directions, your brand’s reputation will immediately be under assault.
Customers’ worries about the safety and retention of their data, the status of their orders, payment methods, and other concerns could potentially put contracts and relationships at risk and raise concerns about other potential issues. Indirectly, in the long term, potential customers and potential future employees could turn away from your organization if news of a mishandled event gets out.
Though no company is immune, having a DR plan can help your organization to contain damage, proactively communicate to internal and external stakeholders, and provide the necessary actions to respond.
As the Forrester study alludes to, organizational operations will also be negatively impacted by the lack of a proactive DR plan. All departments and functions could be prevented from performing their duties for hours, degrading your services, productivity, and ability to meet obligations. When a disaster strikes, your organization will be racing the clock to communicate the actions and solutions to get services and systems back online. Having a comprehensive, tested, and updated DR plan can help to reduce the total downtime, contain negative impacts, and give your staff options and actions to take to recover.
A disaster can also result in data loss, at least temporarily and potentially permanently. Without a system of backups, alternate data sources, or other sites to operate from, data could be lost, putting operational obligations at risk or allowing activities to go untracked. At the same time, having a DR plan can limit productivity losses because staff are able to get back up and running faster while also limiting the risk of rework.
Finally, a DR plan could be a compliance requirement by your regulator. If so, the scale of negative consequences that could result from not having a sound DR plan in place could increase the chance your organization could incur additional fines on top of those already adding up from the event itself.
According to a 2015 Disaster Recovery Preparedness Council report, one in five companies lost critical operations services for a period of days, resulting in outages that cost from thousands of dollars up to several million dollars in damages or lost revenue.
Although this study and the previously mentioned one from Gartner attempt to quantify the financial costs of IT downtime, the indirect and direct costs involved in responding and recovering from a disaster can quickly add up. Whether a natural event, human error, or criminal act, the cost/benefit ratio of taking the time and making the investment to develop and maintain a DR plan can quickly break in the DR plan’s favor.
No Company Is Immune
There is no such thing as an organization that is immune from the threat of a disaster, especially with reminders of data breaches and weather events constantly making headlines. The when, where, and how may be unknown, but the cost and reputational consequences evidenced by others are very real and can be a lesson for your organization. No matter how you look at it, developing a DR plan can help mitigate risk and potentially allow your organization to bounce back more quickly from a disaster.