RBS announced today that it is setting aside £125m to compensate customers impacted by the recent problems with IT systems. Whilst this seems like a huge figure, it probably only represents a small fraction of the true cost. Research into numerous IT outages estimated that the average total cost (including loss of reputation) was around 2% of firm value: for a bank the size of RBS this would equate to a loss of about £500m. Given the very high-profile nature of the incident at RBS; the number of people affected; and the prolonged nature of the disruption the ultimate cost could be even greater.
More information about the cost of operational disruptions is available in the Downloads section of our website.