In the past 30 years we have read countless statistics and frightening stories about businesses going bankrupt due to a disaster, data breach or other crisis where they didn’t have the necessary plans in place to mitigate the risks. The question still remains is this scare mongering or can these statistics be backed up by fact/data.
Here are some of the scary headlines from the past
- Over 70% of businesses involved in a major fire either do not reopen, or subsequently fail within 3 years of fire.
- 70 percent of companies go out of business after a major data loss (Source, UK DTI)
- Research by IBM (Varcoe, 1993) showed that 80 per cent of organisations without relevant contingency plans who suffered a computer disaster went bankrupt
- A recent study from Gartner, Inc., found that 90 percent of companies that experience data loss go out of business within two years. (Written April 5, 2005)
- But when Gartner predicts that two out of five enterprises that experience a disaster will go out of business within five years of the event, companies might want to sit up and take notice.
- According to Aveco, 20 percent of companies will suffer fire, flood, power failures, terrorism or hardware or software disaster. Of those without a DRP:
- 80 percent will fail in just over a year
- 43 percent will not even reopen
- 93 percent that experience a significant data loss are out of business within five years
My sneaky suspicion is that many of these statistics were made up by companies that are selling crisis management solutions, software and hardware for disaster recovery, BCP consultancy….fear sells, scare someone into believing a disaster will happens unless you buy bla bla bla …….and there is a higher chance they will buy a product or service. If you look at recent data breaches like Dropbox, Yahoo, Sony Playerstation where millions of records of personal customer data was stolen between 2011-2013 and they are still in business 5 years later. The key to BCP plans is really how you as an organisation communicate effectively to keep your customers well informed and loyal to your brand. Perhaps the statistic is relevant for SME’s who might not enjoy the deep financial pockets of large global companies. For those organisations it’s even more critical to keep customers engaged after a disaster as they don’t have the large PR machines behind them to help improve their reputation and customer loyalty.