Business Recovery Facts

How many businesses survive a natural or man-made disaster?

A report* compiled by the U.S. Department of Homeland Security, Office of Domestic Preparedness in conjunction with Michigan State University states:

  • Most businesses do not have an emergency or business recovery plan even though they know it's important
  • 47% of businesses that experience a fire or major theft go out of business
  • 44% of companies that lose records in a disaster never resume business
  • 93% of companes that experience a significant data loss are out of business within five years
  • The majority of businesses spend less than 3% of their total budget on business recovery planning

"Critical Incident Protocol - A Public-Private Partnership"

A frequently quoted study conducted by the University of Texas** revealed the following sobering statistics:

  • 85% of organizations are heavily or totally dependent upon computer systems.
  • On average, by the sixth day of an outage, companies' experience a 25% loss in daily revenue; by the 25th day it is 40%.
  • Financial and functional loss increases rapidly after the onset of an outage.
  • Within two weeks of the loss of computer support, 75% of organizations reach critical or total loss of functioning.
  • 43% of companies that experience a disaster but have no business recovery plan in place never reopen.
  • Of companies that experience a disaster but have no tested business recovery plans in place, only one in ten are still in business two years later.

If an organization is fortunate enough to survive a disaster without a plan for recovery, it will not survive unscathed. Aside from the direct revenue losses incurred during the failure, the organization will also suffer intangible costs such as cash flow interruption, loss of customers, loss of competitive edge, erosion of industry image, and reduced market share.

Events and circumstances beyond your control such as area lock downs and access restrictions imposed by government authority can contribute to these type of losses when it can be easily prevented through cooperation and planning.

** (Christensen, S. R., et. al, "FINANCIAL AND FUNCTIONAL IMPACTS OF COMPUTER OUTAGES ON BUSINESSES", Center for Research on Information Systems, The University of Texas at Arlington.)