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The potential consequences of not properly disposing of data after an outsourcing contract primarily hinge on the implications of data security and compliance. When sensitive data is not adequately handled, it increases the likelihood of unauthorized access and can lead to data breaches. Such breaches can expose personal or confidential information, ultimately resulting in reputational damage, financial losses, and the potential for regulatory fines.

Furthermore, mishandled data can give rise to legal issues, especially if the data involves personally identifiable information (PII) or is subject to data protection regulations such as GDPR or HIPAA. Organizations may face lawsuits from affected individuals or penalties from regulatory bodies for failing to protect sensitive data after the termination of the outsourcing relationship.

In summary, the risk of data breaches and ensuing legal consequences serves as a critical reason why proper data disposal practices should be an integral part of any organization's data governance strategy, especially in the context of outsourcing arrangements.