To ensure against losing your iTunes library in the event of hard drive failure you should backup your library. As your library grows backing up to CD or DVD can become impractical and copying the entire contents of your library to an external drive each time you wish to make a backup is inefficient. If your computer isn't already supplied with a backup mechanism then a tool such as SyncToy is an ideal approach. In use the program compares two sets of folders and can update each with the changes that have occurred in the other since the last sync; adding, removing or updating files as appropriate.
How to use SyncToy to backup your iTunes Library
Download and install SyncToy 2.1, a freely available utility. The first time you run it you should get this screen.
Click on Create New Folder Pair.
Click Browse to set the left folder.
Select your iTunes folder, then click the right-hand Browse button to set the right folder.
Browse to the drive or network folder you want to use for the backup, use the Make New Folder button to create a new folder, rename it as iTunes, select it and click OK.
Use the Synchronize option if you want to be able to copy new and updated files in both directions. Otherwise use Echo or Contribute. Contribute provides the greatest protection against deleting the backup copy of any file that you might accidentally remove from the main library. Click Next.
Name your folder pair iTunes and click Finish.
Select iTunes in the list of available folder pairs and click Preview.
SyncToy will scan your folders. The more files you have, the longer this phase will take. Check the results of the preview which, on the first occasion, should contain many New and Create Folder operations and nothing else. If you are happy the suggested list of operations makes sense then click Run and wait for it to complete.
The next time you preview the folder pair only new or changed files will need updating. Pay attention to any deletions - these may represent files that have been updated and renamed in which case there will be a matching new file or they may represent files that have been accidentally deleted which you will want to restore from the backup file set before you proceed with another sync operation. If they are files you deleted intentionally then you can proceed. It is also worth noting that iTunes will add and remove files and folders from within the Album Artwork directory as and when you update artwork in your library.
As long as your library is self-contained, that is all files are consolidated and the media folder is inside the main iTunes library folder, then the backup copy of your library will be fully functional in its own right from whatever drive letter or path it appears on. If, on the other hand, your media folder is split from the library folder then you will need to create another folder pair to take care of that separately and, in the event of a disaster, you would need to restore the media folder to the same path that it currently occupies.
N.b. You can also use SyncToy to create other folder pairs for other important data that you wish to back up regularly.