What's your cost per hour of downtime?
- Secure365 Technologies
- Jun 24, 2024
- 2 min read
Updated: Mar 7
The cost of downtime resulting from a security breach, or any other means can be significant, impacting both finances and your reputation. Understanding your business's cost per hour of downtime is crucial for risk management and effective incident response planning.
1. Identify Critical Systems and Services
Begin by identifying the key systems, applications, and services that are critical to your business operations. These are the assets that, if compromised or unavailable due to a breach, would have the most severe impact on your business continuity.
2. Estimate Financial Impact
To calculate the cost per hour of downtime, you need to estimate the financial impact on your organization.
Revenue Loss: Calculate the revenue generated per hour from the affected systems or services.
Productivity Loss: Estimate the cost of lost productivity for employees who cannot perform their duties.
Penalties and Fines: Include any regulatory fines or penalties that may apply due to the breach.
Reputation Damage: Factor in potential long-term damage to your brand and customer trust.
3. Gather Historical Data
Review past incidents, if available, to gather data on the actual costs incurred during previous downtime events. This historical data can provide insights into the realistic financial impact and help refine your estimates.
4. Calculate the Cost Per Hour
Once you have gathered the necessary data and estimates, use the following formula to calculate your cost per hour of downtime:
Cost per Hour of Downtime = Revenue Loss per Hour + Productivity Loss per Hour + Penalties and Fines per Hour + Reputation Damage per Hour
5. Consider Indirect Costs
Legal Fees: Costs associated with legal consultations and potential lawsuits.
IT Recovery Costs: Expenses related to IT recovery efforts, forensic investigations, and system repairs.
6. Review and Refine
Regularly review and refine your calculations based on evolving business needs, technological advancements, and changes in regulatory requirements.
Keep in mind that the cost per hour of downtime can fluctuate over time.
7. Example Calculation:
Revenue Loss per Hour: $50,000
Productivity Loss per Hour: $20,000
Penalties and Fines per Hour: $5,000
Reputation Damage per Hour: $10,000
Cost per Hour of Downtime = $50,000 + $20,000 + $5,000 + $10,000 = $85,000