February 15, 2010

Unlimited Liability

I’m often asked by enterprises about unlimited liability, and how a corporation can set up their IT asset disposition process so that once they turn over their assets for disposal to another party, they are no longer held liable for any potential breaches.

The straight answer is that there is no such thing as unlimited liability. Companies are still very much accountable for what happens downstream with that asset. That’s why a proper ITAD process is so important.

A third party provider can sign a contract promising to absorb any and all liability arising from an incident but the reality is that the limit to that liability is maxed out at the value of that provider’s assets. If you have a claim that exceeds the value of the provider’s assets, the provider may go out of business covering what it can of the claim, but your organization will still be responsible for the balance of the claim.

An agreement for unlimited liability also doesn’t address the other costs borne by your organization such as damage to reputation and loss of customer goodwill, notifying affected individuals of the breach, and implementing corrective actions to ensure it doesn’t happen again.

The bottom line is that a third party ITAD provider will provide a layer of liability protection, but ultimate responsibility for your organization’s assets always remains with the organization. Make sure you investigate your provider thoroughly and have a complete and transparent understanding of their disposition process, reputation and fiscal health. If you can look under the rocks and still be glad you did, you’re on the right path.

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