This is how much data loss costs

Who is liable for the data if it is irretrievably lost?

In larger companies in particular, countless pieces of data are constantly being generated as part of business activities. This data is usually managed and processed with the help of complex IT systems. The value of this data material depends above all on the type of data and the benefits it brings to the company in question.

Unlike physical objects, data has no material value. Stored optically on a CD or DVD or magnetically on a hard disk, it is neither tangible nor visible without the aid of a computer. In many cases, data is also unique and irrevocably lost if it is lost. This applies to technical drawings, manuscripts and expert opinions as well as vacation or wedding photos.

If data is irretrievably lost in a company, the question of appropriate compensation quickly arises. German tort law distinguishes between compensation and restoration. In principle, this law assumes that the respective damaging party must compensate for the damage incurred as part of a restoration. To this end, he must either repair the damage himself or pay the amount of money required for the restoration. This would be, for example, the amount that a data recovery company would demand to make destroyed data readable again.

However, if the data has been lost for good, this path leads to a dead end. If it is not possible for anyone to restore the data in the same form, no amount of money is owed. However, this does not automatically release the damaging party from its obligation to pay compensation. Rather, due to the impossibility of restoration, he owes compensation in money, the amount of which is calculated according to the so-called difference hypothesis.

For this purpose, the difference between the financial situation of the injured party after the occurrence of the damaging event and the hypothetical financial situation without this event is determined. According to this calculation, the compensable damage corresponds to the costs incurred to reconstruct lost, non-recoverable data from memory, as well as the additional time and personnel expenses resulting from the disrupted business processes. The loss of profit is also considered to be compensable damage.

It is clear from this type of compensation that only consequential damages and loss of profit are eligible for compensation. The lost data itself has no monetary value. This statement is by no means a legal and conceptual trifle. It is certainly relevant when it comes to private files such as the aforementioned digital vacation photos. If these are irretrievably lost, this is undoubtedly annoying for those affected, but it does not result in any material damage. For this reason, private individuals cannot generally expect to receive compensation in the event of data loss.

However, even companies that suffer major damage due to the destruction of data are not automatically compensated for their losses. Anyone who fails to back up their data regularly is at least partly to blame. For this reason, company-relevant data should be available in second or third copies on different data carriers. If this is neglected, the injured party may even be left to bear the entire loss.

Now more than ever, companies need to be aware that their data represents capital and therefore deserves special attention. Evaluating data from a business perspective helps to find the appropriate technology for data security without overshooting the mark or running the risk of technologically neglecting important company data