How much does data loss cost
Who is liable for the data if it is irretrievably lost?
In particular in larger companies, countless amounts of data are constantly generated in the course of business activities. This data is usually managed and processed with the help of complex IT systems. The value of this data material depends primarily on the type of data and the benefit it brings to the company.
In contrast to physical objects, data has no material value. Visually stored on a CD or DVD or magnetically on a hard drive, 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 reports as well as to holiday or wedding photos.
If data is irretrievably lost in a company, the question of appropriate compensation quickly arises. Here, the German law of damages distinguishes between compensation for damage and restoration. Basically, this law assumes that the respective damaging party must compensate for the damage incurred within the scope of restoration. For this purpose, 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 is permanently lost, this path leads to a dead end. If no one is able to restore the data in the same form, no amount of money necessary to do so is owed. However, this does not automatically release the damaging party from its obligation to pay compensation. He owes then because of the impossibility of a restoration rather the damage compensation in money, whose extent is calculated according to the so-called difference hypothesis.
For this the difference of the fortune situation of the damaged party after entrance of the damage event to the hypothetical fortune situation without this occurrence is determined. According to this calculation, the compensable damage corresponds to the costs that have to be spent in order to reconstruct lost, non-recoverable data from memory, as well as the additional expenditure in terms of time and personnel that result from the disrupted business processes. Also the lost profit is considered as compensable damage.
From this kind of the damage compensation it is evident that exclusively consequential damages and loss of profit are compensable. The disappeared data itself has no monetary value. This statement is by no means a legal triviality. It is absolutely relevant as soon as it concerns private files such as the digital holiday photos already mentioned. If these are irretrievably lost, this is undoubtedly annoying for those affected, but there is no material damage. Therefore, private individuals cannot usually count on compensation for damages in the event of data loss.
But even companies that suffer major damage due to the destruction of data do not automatically receive compensation for their losses. If you fail to back up your data regularly, you are at least partly to blame. Therefore, company-relevant data should be available in duplicate or third party copies on different data carriers. If this is neglected, the aggrieved party may even be left with no recourse at all.
Nowadays, companies need to be more aware than ever that their data represents capital and therefore deserves special attention. The evaluation of data from a business point of view helps to find the appropriate technology for data security without overshooting the mark or running the risk of technologically neglecting important company data
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This article covers:Data loss in the enterprise
Consequential damages for loss of data
Compensatory damages for data loss
Damage compensation for data loss