What Is Data Loss? Causes, Prevention, and Recovery

Learn what data loss is and what steps can be taken to prevent it from happening.


Jan 20,2023

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In the modern world, many businesses are data dependent. The information the companies store, process, and develop is vital for their day-to-day functions. Any incident causing the deletion or disappearance of data can wreak havoc. 

So, what is data loss, and how can it be prevented? In this article, we’ll answer these questions, focusing on causes and recovery strategies used to bring back the businesses that were brought to a crawl by this unfortunate event.

Definition of Data Loss 

Data loss occurs when sensitive information is compromised by being corrupted, destroyed, or made inaccessible. Sometimes, valuable information can get lost in transmission or during processing. These incidents can be caused by human error, different forms of malware, theft, power failure, physical damage, and several other factors. 

While data loss is often used interchangeably with a data breach, these are two separate things. In both, data is compromised, but no information is damaged when it comes to a data breach alone. It is simply someone else who took a hold of it. If data loss occurs in a data breach, the data is destroyed. 

Data Loss Causes

From disasters to human error, let’s examine the top 10 causes of data loss. Each of these factors presents a risk to our data, and there are situations in which more than one cause can coincide, making things even more challenging to handle.

Hackers and Insider Threats 

External threats, such as hackers, can compromise companies’ data by stealing, encrypting, or simply deleting it. If they manage to gain access, they will aim to cause as much damage as possible, targeting the entire network.

Hackers who are after data will try to take advantage of vulnerabilities in the company’s information system, such as inadequate firewalls, poorly secured servers, and weak passwords. 

Other than skilled hackers who want money or recognition, company owners need to be mindful of how much access they allow to their staff, as sometimes, the very employees of the company compromise data. Staff members can be instructed by a third party to spy and steal data, or they can be rogue employees driven by a personal vendetta. 

To prevent data loss, business owners set different permission levels to limit access to critical information. A limited number of employees can usually access all of the data, and even their access is reduced to a short period. 

Human Error

Humans make mistakes. Employees can accidentally delete or overwrite data, leading to data loss. Many other data loss incidents on this list, like software corruption, hard drive damage, or liquid spills are often caused by employees who did not mean to cause any harm.

Business owners try to avoid these situations by training their staff regularly and automating as many of their data-related processes as possible. The goal is to keep people from getting too close to sensitive information.

Regular and frequent backup of the company’s entire database is a fool-proof method that can be used as a last resort for dealing with the loss of data.

Power Outages 

Power outages could be particularly damaging. They can cause corruption of the files if the shutdown process isn’t properly done and all unsaved data can be lost. The outages can disable programs and destroy hard drives.

Aside from proper and frequent backup, businesses need to rely on surge protectors to help with any damage in case of outages. Additionally, backup batteries and a generator are necessary for saving and retrieving data if a power outage occurs.

Laptop Theft

More and more companies offer remote work, resulting in many employees taking their laptops with them while working remotely. If the laptop gets stolen while the employee is working from a coffee shop or commuting, or has left the device unattended, losing data vital for the company is almost inescapable. This holds especially true if the device isn’t password-protected. 

The value of data is often much higher than the value of hardware itself, and if the data falls into the wrong hands or gets compromised in any way, the entire business can be affected.

Another problem that may occur is a data breach. If the thief manages to log in to the laptop, they can access the system and cause harm. A system should always be set in place that can remotely wipe out all data from specific devices, along with the functionality of backing up all essential information to a remote location. 

Companies usually employ anti-theft software that has the feature of wiping all data, as well as tracking the laptop, so law enforcement can easily find and retrieve it. 

Software Corruption 

Data can be lost due to software crashes or improper shutdowns. If the software crashes and won’t relaunch, you won’t be able to access your data. Companies that are working on preventing data loss usually set procedures for properly shutting down software after each use. 

Employees should be trained to follow the proven procedures for saving their work and know how to shut the processes down to minimize the risk of losing data due to software corruption. 


Various types of malware can infect entire networks and steal, delete, or encrypt data. For example, ransomware is a type of malware that encrypts a company’s data. For attackers to provide the decryption key and safely return captured information, the affected party must pay the ransom.

In many cases, even after the ransom is paid, the attacker never provides the decryption key. It is advised not to pay the amount asked and to report the attack to the authorities. Having data backed up could be very helpful in this case. 

Other threats, like viruses, can steal data and permanently destroy it. Here, reliable anti malware solutions and regular staff training on recognizing and preventing cyberattacks are the most effective in reducing the risk of data loss.


Floods, fires, or extreme weather conditions are usually hard to anticipate, so each business needs to have a disaster recovery plan ready. The disaster recovery strategy helps companies save what can be saved in the aftermath. 

Proper disaster recovery should bring back the company’s total operational capacity, including hardware and applications, not only data. The plan needs to be made ahead of time, and everyone involved needs to follow the instructions to ensure the smoothest recovery.

Liquid Damage 

Spillage of liquids onto the keyboard may not seem that problematic, but a single clumsy move can cause great damage. Data loss incidents such as this affect the hard drive and can even destroy the device, preventing anyone from using it. 

Many companies address this risk by instructing staff to keep beverages on their desks, away from their devices, or by requiring spill-proof containers for coffee, tea, or other liquids. 

Hard Drive Damage

The hard drives need to be kept secure from any physical damage as they store a vast amount of data. They can be affected by different external factors, but also by overheating or power failure

Proper maintenance, such as cleaning the dust, should be done regularly, and businesses need to check if the hard drives are overused and need replacing. Some businesses rely on solid-state drives (SSDs) because they are more durable than hard disk drives (HDDs).

If the hard drive is somewhat damaged but still functional, the lost data can be retrieved by connecting the HDD to another computer or by using data recovery software. 

Hard Drive Formatting 

Hard drive formatting mainly occurs by accident, and as a result, it wipes all the data out. When employees unintentionally delete all information, they should report the issue to higher-ups, so the appropriate steps for recovery can be taken. In most cases, data recovery software is the best solution for recovering data. 

The Data Loss Impact

The time and resources put into building a solid strategy for preventing and mitigating data loss may seem costly, but it’s all well worth it. According to FEMA, 40-60% of small businesses never recover after a data loss, so investing in protecting your data is not only desirable, but necessary for safely conducting business.

To better understand how damaging data loss can be to organizations, let’s see what has to be done if the company doesn't take the threat of data loss seriously. 

The chaos that ensues after a major data loss involves the efforts of businesses to control the damage and reestablish the trust of their customers. Regaining trust is significantly more complex if the lost information includes customer data.

The company’s reputation may never recover. One data loss is enough for most customers to back out and never return. Ultimately, any organization that loses a large portion of its customers can quickly go out of business. 

To make things worse, while working to recover lost data, rebuild trust with customers, and address the issue publicly, companies might face lawsuits and fines. Due to set regulations, if it’s established that the company didn’t stick to the data protection laws, there could be additional individual lawsuits from customers whose data was compromised. 

Even if they manage to solve the legal problems and regain trust, if the data isn’t retrieved, no business will be able to run its day-to-day operations. This also means it won’t be able to keep the necessary productivity streak to stay competitive. 

Similarly, if the data is gone, information-based companies won’t be able to continue making money. Additionally, they might have to rely on their reserves and spend funds on retrieving the information they originally lost.

To illustrate how financially damaging these setbacks are, Datto’s statistics show that the average cost of downtime for large enterprises amounts to more than $11,600 per minute.

With all this in mind, companies aware of the devastating impact of data loss should take all the necessary precautions and invest in data loss prevention strategies. Business owners should know that the money invested in keeping data safe is money well spent, since any of the above scenarios could cost millions of dollars and even force the company to shut down for good.

Data Loss Prevention 

Data loss prevention (DLP) aims to secure sensitive and confidential information from internal or external actors who might destroy, mishandle, or share it with third parties. The strategy revolves around quickly identifying, preventing, and mitigating data breaches or exfiltration while complying with set regulations.

Some of the key aspects that professionals and appropriate programs are monitoring are possible data leaks or loss of critical information, whether they occur due to a malware attack or hardware’s physical damage. 

DLP is leveraged to ensure the data on cloud systems and personally identifiable information are kept secure. Moreover, one of the key objectives is to safeguard the intellectual property of the organization, and provide optimal security for the mobile workforce. Finally, DLP focuses on achieving data visibility in enterprise environments. 

DLP measures could achieve close to nothing without a sophisticated suite of tools and practices. Most companies consider several factors when it comes to choosing the best DLP software solution for their organization.

Since there’s an abundance of options to choose from, finding the right fit is sometimes challenging. This pool of available DLP software is widening with technological advances, and each of the competitors is striving to offer an impenetrable system to keep your company from falling prey to any loss of information. 

The company also needs to back up all of its data and have a plan for how to keep its data files safe in case of a flood or fire. An uninterruptible power supply (UPS) that will act as a secondary source of power in case of an outage is also always a good idea. 

Finally, reliable antivirus software is necessary, as it will stand guard over your data and block a variety of threats that can compromise your information systems.

Data Recovery 

Companies that focus on restoring lost data seek to retrieve removable files, media, or a secondary storage system first. The process is meticulous, and top companies providing these services aim to recover even the tiniest pieces of sensitive data. 

This is not to say that every recovery attempt is successful. Businesses need to have at least one recent copy of their most important data to start the recovery process. 

Such enormous effort is put into preserving data because data is, in a way, a currency in the modern world. The enterprises with the most accurate, structured, and organized data are the front-runners in almost every industry.

Final Thoughts 

Now that we know what data loss is, we can better understand the impact it can have on any business. If not treated seriously, data loss can even lead to bankruptcy. It is, therefore, not surprising that companies invest enormous amounts of money in predicting, preventing, and recovering any data loss that may occur. 

Any business not taking this issue seriously might have all of its assets wiped out in minutes, risking never recovering from such an event.

What are the causes of data loss?

There are many different causes of data loss, but the most common are human error, disasters, laptop theft, hard drive damage, hard drive formatting, malware or viruses, hackers, and insider threats. 

What is the risk of data loss for users?

If you’re a user whose data was compromised, you can face damage to your reputation or even identity theft. If this happens, you might be eligible for compensation or could even sue the company that let your customer data be compromised. 

What is an example of data loss?

Data loss can occur due to physical damage to the device, device theft, power outages, and even viruses. An employee who clicks on a malicious link in a phishing email is an example of data loss caused by a virus. This makes it possible for the virus to spread through the network and steal, change, or delete data for the whole organization. 

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