The better approach is to validate the image upon uploading and to allow saving to the database only if the image was OK.
If you use the ItemDataBound event to validate the images prior displaying them you will need to check every single image from the database and you will do it every time the Grid reloads its data. In the case I am suggesting you will need to check only one time the image prior inserting it into the database and thus you will be sure the image is OK.
How you will validate the image depends on how it is stored and read, you could either user standard validator control or to provide custom validation settings.
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