Generally, business records should be retained for two purposes:
- Their usefulness to the organization in verifying and assessing transactions, correspondence and other matters material to the organization.
- Compliance with corporate and regulatory record-keeping requirements (so the government can verify and assess transactions, correspondence and other matters relating to the organization).
Once both of those purposes no longer apply, the documents’ retention period is over, and they should be destroyed.
In practice, however, this is not how it usually goes. Many organizations retain records for years or even decades beyond what is necessary and are more likely to destroy them only when storage space or expense becomes an issue.
The problem is, as is outlined below, unnecessarily retaining records beyond their retention period exposes an organization to a range of potential problems beyond storage cost.
THE RISKS OF RETAINING UNNEEDED RECORDS
RISK #1: Increased Opportunities for Unauthorized Use
Retaining business records longer than required increases the window of opportunity for unauthorized access or disclosure. The more data stored and the older it becomes, the harder it is to monitor, secure, and update. Legacy systems, forgotten files, and expanded storage environments create additional vulnerabilities, making sensitive information more susceptible to breaches, insider misuse, or accidental exposure over time.
RISK #2: Increased Legal Discovery Costs and Risks
Retaining business records longer than necessary also enlarges the pool of information available during legal discovery. This increases organizational exposure, review costs, and the likelihood that outdated, irrelevant, or potentially harmful documents will be demanded, scrutinized, misunderstood, or used in a manner unfavorable to the company.
RISK #3: Raising Suspicion of Plaintiffs, Courts and Regulators
Sporadic, unscheduled destruction of retained records could appear suspicious to litigants or authorities and cast doubt on the reliability of a company’s records because it does not follow a consistent, documented process. When records are destroyed irregularly, especially outside an established retention schedule, it can look intentional rather than routine. Plaintiffs or regulators may infer that materials were selectively destroyed to avoid disclosure, raising questions about motive, credibility, and good-faith compliance.
RISK #4: Undermining of Retention Policies
When business records are retained beyond the requirements of a retention policy, that policy is undermined. When staff see that expired records are still kept, compliance weakens, exceptions multiply, and enforcement becomes difficult. Over-retention blurs accountability, complicates audits, and erodes confidence in the policy’s legitimacy, ultimately reducing the organization’s ability to manage information effectively. Additionally, unnecessary retention increases costs for the organization—legal, compliance, administrative and storage costs, to name a few,
GETTING BACK TO A ROUTINE RECORDS DESTRUCTION PROCESS
Inevitably, there comes a time when an organization decides it has to get rid of some old records. Maybe the company ran out of storage space. Maybe someone decided it was time to get compliant with a policy. Maybe an undesirable event shined a light on a faulty retention process. Whatever the reason, it presents an opportunity to get things back on the right track.
- Review or Create the Records Retention Policy.
It is likely that the organization either has no retention policy or that its existing policy has not been updated in a very long time. When creating or updating a retention policy, one should consult legal counsel for advice and/or sign-off on the policy. There is no standard, one-size-fits-all records retention policy, as the requirements can vary due to the industry, technology, business size, and the geographic regions where business is conducted. Along with setting retention requirements for categories of information, the policy should also specify if the destruction requires authorization, and a process for determining which records are subject to any company, court or regulator preservation orders (“legal holds”) that supersede destruction.
- Document the Destruction Event
Establish an internal communications chain that documents the entire process, including what records are to be destroyed and the method and date of destruction. In most cases, a service provider will facilitate the destruction process. In that event, the process by which that vendor was hired, including the diligence of the vendor selection effort, should also be documented. Finally, a “certificate of destruction,” or other form of receipt should be obtained from the vendor after the records are destroyed that should be kept with organizational records.
- Assure that Obsolete Records Destruction is an Annual Event
If the first two steps are not followed by future periodic (at least annual) purges of obsolete records, then the attempt to reform the process has failed. If it appears sporadic or erratic, then it probably is sporadic and erratic, and the organization is right back where it started. Where practical, there is benefit to having legal counsel or compliance personnel verify or trigger annual destruction of unnecessary records.
SHRED VAULT CAN HELP
Shred Vault offers secure, industry-compliant document destruction options that can fit your needs.
- Large Scale Records Purges: Shred Vault’s local service partner can come to you to assist with destroying anywhere from 10 to 100,000 boxes of obsolete records. For your convenience, you have the option of having the records shredded at your location by a state-of-the-art mobile shred truck or we can pick them up for destruction at our local secure destruction facility.
- Small Scale Records Purges: Organizations with a small amount of records to destroy can take advantage of Shred Vault’s network of conveniently located secure kiosks. Simply bag the documents in a Shred Vault Bag and deposit them at the kiosk. We handle the rest.
- Routine Service: Shred Vault and its partners can also provide organizations with a variety of secure collection consoles and containers for the convenient collection of confidential documents at your place of business. The contents of these containers are shredded on a regular schedule based on the client’s needs and preferences.
- Electronic Equipment Destruction: Shred Vault also offers destruction of computer hard drives, cell phones and other electronics.
Contact Shred Vault today for more information and let us help with all your secure disposal needs.
This article is intended for general informational purposes only and does not constitute legal advice. While it discusses best practices for record-keeping, readers should consult qualified legal professionals or compliance experts for guidance specific to their circumstances, location and applicable laws.
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