Permanent data loss

Permanent data loss refers to the irreversible destruction of hosted data, distinct from a simple service interruption: a service can be restored within hours after an outage, whereas data destroyed with no usable copy surviving elsewhere is lost for good, however quickly the technical service itself comes back online. This risk fully materializes when a client's backup sits on the same site as its production data, a more common practice than one might assume among smaller organizations, for reasons of cost or a lack of awareness of local accumulation risk. For insurers, permanent data loss raises a specific valuation question: unlike a physical server whose replacement cost is easily priced, the value of lost proprietary data, a customer database, source code, accounting history, depends on whether it can be reconstructed at all and at what real cost when it can. This peril has accelerated the adoption of backup policies geographically distinct from the production site as an implicit or explicit condition of insurability for a digital business.

After the March 2021 fire at OVHcloud's Strasbourg site, clients who had kept no backup outside the destroyed building permanently lost their data, even though the hosting service itself could eventually be rebuilt elsewhere.

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