The cost of one day of downtime is the sum of direct losses from one day of a process stoppage (lost revenue that cannot be made up, contract penalties, pay for idle staff, recovery costs) and indirect losses (customers leaving, damage to reputation). The basic calculation: the process's daily revenue multiplied by the share of sales that cannot be recovered, plus fixed costs for the day and penalties.
Case: two weeks of firefighting
A small logistics company with twelve people. One of its key suppliers suddenly declared bankruptcy, with no warning. Everything you needed to know about backup contacts, alternative supply chains and arrangements with customers was in the head of one employee. And at that moment he was on holiday and answered only every other call.
For two weeks the company was firefighting: customers were waiting for explanations, money was stuck, and the team did not understand who was actually making decisions.
The first question: what does a day of downtime cost?
We started with a simple question: how much does one day of this downtime cost? The company had never calculated it. When we did, it came to about RUB 180,000 per day. As soon as the figure was on paper, it became clear that there was no financial reserve for such a scenario. That meant the next crisis could cost much more.
What was done, without heavy rulebooks
- Backup suppliers on paper. A simple list of contacts and a clear procedure in case the main partner drops out, with no complex rulebook.
- Duplicated data. Customer information was duplicated and kept in parallel in several databases, so that it did not depend on one person or one device.
- Financial cushion. We calculated a specific reserve amount and started setting it aside every month.
Result
A few months later another counterparty pulled out of a contract, and the company coped in two days. Luck had nothing to do with it: the team knew what to do and had a reserve to act without panic.
Systematic risk management cannot foresee everything. Its purpose is to make sure you are not caught off guard. One story with a happy ending is worth more than dozens of discussions about why resilience matters.
What makes up the cost of one day of downtime
| Loss item | How to calculate | Often forgotten |
|---|---|---|
| Lost revenue | Average daily revenue adjusted for the season | Peak days cost several times more than average ones |
| Pay for idle teams | Payroll per day for the affected units | Contractors and hourly specialists |
| Fines and penalties | SLAs with customers, contractual sanctions | Default interest grows with every day of delay |
| Recovery | IT work, consultants, overtime | Urgency doubles the price |
| Customer churn | Share of customers lost after the disruption, multiplied by LTV | The largest and least visible item |
| Reputation and marketing | Budget for rebuilding trust | Negative reviews live on for years |
The cost of an hour is calculated the same way: divide the daily amount by the number of hours the process runs. For peak hours, use their actual revenue.
You can calculate the cost of one day of downtime for a specific scenario in a readiness check: drone strike for a site or ransomware for the IT landscape.
Frequently asked questions
Add up the revenue lost in a day, the costs that continue despite the downtime (salaries, rent, interest), contract penalties and fines, the cost of recovery and an estimate of lost customers. For most companies the result is two to three times higher than the first intuitive estimate.
Where do you start if there are many processes?
Take three processes without which the business cannot work for even a day, and calculate the cost of downtime for each. This already shows where the main risk is concentrated.
How big should the financial cushion be?
A guideline is the cost of several days of downtime of a key process plus a reserve for recovery. The exact amount is calculated from the assessment of critical functions.
Check your recovery numbers
The assessment shows where the recovery times the business needs do not match what the technology can deliver. After that, either your specialist calculates these numbers, or we do.
