Risk of Data Loss and IT Systems Failures in Organisations

Organizations in current times are competing in a global market where time and distance have no meaning. Competition being intense, companies have got to ensure that they delivery top line performance all the time and not risk any kind of failures. Disaster Recovery and Business Continuity planning concept has come of age in the new world.

The concepts of risk analysis and mitigation are relevant to all areas of business and scales of organizations. However the concept has gained ground more in the IT and service industry where in the risk of failure of IT systems can be disastrous for the company.

Every Organization big or small engages in a lot of IT systems and Communication tools. From desktops, laptops, servers to all sorts of other peripheral equipments, softwares, applications, databases as well as extensive Email and communication networks make up the operational backbone of each and every company. The data that the Companies have in their system including customer details, financial data as well as other operational data including sales, purchase, inventory and other operations is invaluable. Any loss of data can seriously hamper the business operations and cause huge losses to the Organization.

IT systems are known to possess very high risk of failure. The causes of systems failures can be many. The equipments being highly sensitive to power fluctuations, any disruption or fluctuation of power can cause damage or destroy the data. Imagine a bank loosing the data of the transactions in their accounts. Imagine an Organization losing its financial data. These are unthinkable but probable.

Types of Risks to IT Systems:

IT systems can fall prey to several categories of risks. Some of the common areas of disaster are:

  1. Virus attack - Inadequate protection in terms of firewall and other barriers to the internal systems can make the entire system vulnerable to virus attacks through the internet which can harm the internal systems and destroying or corrupting data.
  2. Risk of systems failure and communication network failure due to power fluctuations and absence of effective UPS protection.
  3. Hardware or LAN Failure.
  4. Loss of data due to inadequate backup facility or procedure.
  5. Poorly trained, poorly skilled IT staff that lack sufficient knowledge.
  6. Overdependence on outsourced vendor and their staff.
  7. Poor IT management practices and lack of proper processes for storage and backup of data in all areas of business.
  8. In adequate use of anti-virus package for protection.
  9. Lack of facilities and keeping IT systems in poor environments that are not conducive to the system hardware and performance.

Apart from the above, there can be several and many more risks that are associated with IT systems failures. Of the above, the power related failures and the over dependence upon outsourced vendors and manpower happen to be the most common occurrence events resulting in loss of data in Organizations. In many organizations there seems to be a general lack of seriousness in planning and keeping regular backups in place.

Whatever be the nature of the risk or occurrence, the data loss can create major impact on the business of the Organization. Companies like credit card companies, banks and other service organizations cannot afford to lose any data. Therefore protecting their data calls for adequate investments in protection methods as well as in planning and maintaining a good Disaster Recovery backup plan.


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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.