The Hidden Cost of Doing Nothing: Why Inaction on Hard Copy Records Is a Strategic Risk

For many organizations, boxes of paper records stored off-site represent a silent liability. Once considered a cost-effective and convenient method of meeting regulatory obligations, off-site storage has quietly evolved into a high-risk, high-cost trap. Despite the rise of digital transformation initiatives, physical records often linger in storage facilities for years, if not decades—unmonitored, unstructured, and increasingly irrelevant.

What may have started as a sensible compliance measure is now producing operational strain, legal risk, and opportunity cost. The longer organizations delay modernization, the more urgent and expensive the problems become.

Let’s examine some of the most pressing issues surfacing across industries:

• Escalating Discovery and Legal Costs: According to RAND, reviewing a single GB of data for e-discovery can cost $18,000, and physically stored records may need to be scanned, indexed, and reviewed at high cost under tight legal deadlines — increasing risk of delays, noncompliance, or spoliation.

  
  

• Rising Permanent Withdrawal and Storage Fees: Major storage vendors charge high fees for permanent withdrawals and monthly storage fees per box are only increasing. The net result is that these fees can become more expensive than a one-time digitization and destruction program. In one recent case, for example, a company called Mood Media filed a suit against a major storage vendor based on its estimation of a 499% storage price increase, accusing the company of holding its records hostage for the payment of a “ransom” when it complained about unreasonable fees. This practice is not unusual, and in fact, is increasingly becoming the industry norm.

  
  

• Increased Regulatory and Audit Risk: Regulatory bodies (e.g., HIPAA, SEC, FINRA) expect timely access to records. Failure to retrieve them quickly due to warehouse delays can result in fines, audit failures, or enforcement actions.

  
  

• Loss of Information Value in AI and Analytics: Inaccessible paper records can’t be used in training datasets or analyzed in predictive models, increasing the risk that critical decisions are made without access to historical or supporting data — especially problematic in healthcare, financial services, and insurance sectors.

  
  

• Security and Privacy Vulnerabilities: Physical records are more susceptible to fire, water damage, theft, and unauthorized access. This is especially true in areas that are subject to adverse weather conditions. For example, in 2018, during Hurricane Florence, flooding in coastal North Carolina inundated county health departments, law offices, and municipal buildings resulting in massive losses to medical files, public records, and legal documents in affected counties.

  
  

• Inefficient RIM and Retention Enforcement: Without digitization, it’s difficult to apply consistent retention, legal hold, or disposition rules, increasing the likelihood of over-retention or premature destruction. This creates legal exposure, unnecessary storage costs, and operational confusion — especially when managing records from divestitures or closed sites.

These realities underscore a key truth: the longer records remain in unmanaged boxes, the higher the risks—financial, legal, and operational.

Shifting the Mindset from Storage to Strategy

For too long, physical record storage has been treated as a passive utility, rather than an active information asset or liability. But the landscape has changed. The rise of artificial intelligence, new privacy regulations, aggressive litigation timelines, and climate-related threats all demand a more strategic approach.

This isn’t just about clearing out space. It’s about rethinking the business value of information and aligning storage practices with organizational goals—speed, compliance, security, and insight.

The Role of Information Governance Professionals

Information Governance (IG) professionals are uniquely equipped to lead this transition. With a deep understanding of regulatory requirements, retention schedules, and cross-departmental coordination, IG leaders can bring structure and accountability to what is often a fragmented, outdated system of recordkeeping.

Here are 5 ways that IG professionals can help:

1. Lead Risk Assessments: IG professionals can evaluate which physical records present the greatest regulatory, legal, or cost risks and prioritize them for action.

   
   

2. Develop Digitization Roadmaps: Rather than scanning everything, IG experts can help define criteria for digitization—focusing on records with legal holds, historical value, or high retrieval needs.

   
   

3. Oversee Retention Compliance: By working closely with legal, compliance, and business units, IG leaders can ensure that records slated for destruction meet both legal and operational requirements.

   
   

4. Negotiate with Storage Vendors: IG professionals can analyze storage contracts and seek better terms, reducing unnecessary fees and improving vendor accountability.

   
   

5. Build the Business Case: IG teams are often in the best position to translate risk and inefficiency into financial terms that resonate with senior leadership.

   
   

Conclusion: From Passive Storage to Proactive Stewardship

The idea that physical record storage is “good enough” no longer holds up under scrutiny. From discovery costs to AI readiness, from privacy vulnerabilities to unmanageable fees, organizations are waking up to the true price of inaction.

This is a defining moment for Information Governance professionals—not only to advocate for better practices but to architect a more sustainable and risk-aware future. Transforming physical record management isn’t just a cleanup effort. It’s a strategic imperative.