"But do you want to if you really need the data on it and not have the encryption key there as well?"
Good encryption systems keep the key separate. That's basic best practice. The keys are also on the backup server itself and you should always have a master EFS recovery key.
"With Tape if it's stolen or lost there is very little chance that people responsible will have the ability to read the tape where as a HDD or DVD solution is a different story isn't it? Sure there is no way around a Profession Theft but these are rare and it's mostly amateurs who are responsible for lifting something that was there at the time so these are crimes of convenience not the premeditated type where Industrial Espionage is involved."
Try telling that to the SOX or HIPAA auditor.
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