I’ve been quoting all these statistics in class about the percentage of businesses that fail after experiencing a fire, data loss, etc.  I’ve gotten the figures off of various sites over the years, but recently I’ve wanted to be able find a firm attribution as to who actually produced some of these statistics – you know- a little academic objectivity to show that those little tidbits aren’t all BS.

So I started searching – the first quote is that 70% or 80% of businesses that experience a disaster / fire / data loss fail in a few years.  It took little searching to find several sites that make this claim.  several authors reference “Home Office Computing Magazine” and some others refer to a 2004 DTI report or Chubb Insurance.  Even big organizations like HP and the US Congress quote these figures (see the Back to Business Act of 2007 Section 2 and Impact on U.S. Small Business of Natural and Man-Made disasters, produced with help from HP) . As it turns out, this statistic has been around for years; however, no one seems to know where the original statistic came from or doesn’t bother checking their source.  I read the oft-quoted 31-page (page 32-36 is marketing fluff) 2004 DTI report looking for that 70% statistic or anything analogous – it wasn’t there.

Trying to be thorough, the oft-quoted 2004 DTI report references a two-page Backups and recovery “fact sheet” identified URN 04/610.  The most relevant statistic found in that document: “61% of companies took more than a day to recover from their worst systems failure.  These delays inflicted major disruption to business operations in roughly half the cases.  Some reported disruptions that lasted a month”.  Nothing about business failing, though. . .

This leads me to conclude that the oft-cited “80% of businesses affected by a major incident close within 18 months” is a myth used to sell business continuity services and backup tape libraries.

A search for more business continuity statistics yield similar results.  It seems that people are simply quoting other people’s statistics for marketing fluff.

Oh, and I’m aware that a variation of this statistic even appeared in a congressional bill, “(1) 43 percent of businesses that close following a natural disaster never reopen;(2) an additional 29 percent of businesses close down permanently within 2 years of a natural disaster”  (Back to Business Act of 2007 Section 2).  No attribution is made.  Having statistics appear in the congressional record doesn’t make the claims correct.

One would think that the BBB or some insurance companies could come up with a valid statistic, but so far I’m now going to have to tell students the story of the 80% myth and that, “BCP is very important. . .” And if they ask, “how important?” I’ll tell them, ” . . . well, it’s on your next test!”

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