Protecting Against Risk of Loss — The Wisdom of Records and Information Management Protocols for Offsite Storage Vendors

There has been much news about offsite storage vendors losing critical backup tapes, data or documents while transferring information from one place to another.  The records management industry has started discussing the possibility of developing protocols governing the steps a vendor should take in the handling of information.

The development of protocols make sense to a limited degree. The obligation of a vendor to facilitate ensure the secure transfer of information is governed by common law theories of contract or tort.  However, contracts with offsite storage vendors usually have contractual limitations of liability and lack adequate indemnities to protect the customer’s interests. Hence, there is no incentive to perform in a manner that protects the information transferred, even if such protocols were endorsed and in place across the industry.  The risk of loss is borne principally by the customer. 

In negotiations, customers need to push back on contractual limitations of liability.  The presence of protocols would be a great point of reference in negotiations.  If you are able to negotiate more effectively and shift the risk of loss, a vendor would be more inclined to use care and diligence in the transfer and handling of one’s information. 

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