Maintaining Privacy, Transparency and Security Within Your Business

For an organisation, building and preserving consumer trust is key. With many aspects contributing towards this, data-related practices are one of the most critical factors.

Across all industries, companies rely on customer data more than ever. However, they often fail to consider the ethics behind data usage and struggle to keep customers and their data safe.

In this article, we explore what data ethics is, why it’s crucial, and how businesses can adopt a framework to ensure ethical practices are followed.

What Is Data Ethics?

Data ethics are guidelines that govern how customer data is handled. These best practices ensure companies remain clear and open about their data use while upholding high standards of privacy and security for customers’ information.

There are generally considered to be five core pillars within a data ethics framework:

• Ownership – Individuals have ownership over their personal information, making it unlawful and unethical to collect data without consent.
• Transparency – Companies must make their actions and processes for gathering, storing, and using data accessible for inspection.
• Privacy – Even with consent to collect, store, and analyse data, businesses have a duty to keep this data private and protected.
• Intention – Companies should have a clear, ethical reason for data collection, avoiding any malicious intentions like exploiting vulnerabilities.
• Outcomes – All possible measures should be taken to predict and mitigate harmful outcomes from data analysis.

Why Is Data Ethics Important?

Digital transformation is steadily reshaping business operations, with data playing a vital role. By 2025, an estimated 463 exabytes of data will be produced daily.

It is crucial for organisations to implement a strong ethical framework to protect customer information during data collection, handling, and storage processes.

This is particularly relevant for financial services, where the new consumer duty highlights the need for data ethics. However, every industry has regulatory guidance that aligns with data ethics principles.

Organisations are increasingly embedding a customer-centric, data-privacy-focused culture into their business. This shift from mere compliance to proactive ethical data practices is essential for transformational change.

Consumer trust in businesses is diminishing. To build loyalty, companies must establish digital trust. KPMG research shows that many consumers are sceptical about how companies safeguard their personal data.

Around 54% do not trust companies to use their data ethically, and 68% believe their data will be sold unethically.

What Are The Risks Of Failing To Consider Data Ethics?

Understanding the importance of data ethics highlights the risks when businesses neglect these principles. A major risk is an increased vulnerability to cyber threats, such as data breaches and attacks.

An estimated 80% of businesses worldwide are affected by cybercrime, putting customer data at greater risk than ever before.

Personal customer information that isn't well-protected can be exploited by cybercriminals for fraud and identity theft. This raises significant concerns about data usage and management by the companies they trust.

According to McKinsey:

• 40% of customers stop doing business with companies that do not protect customer data
• 53% use digital services only after ensuring the company has a strong reputation for protecting customer data
• 87% stated that companies perceived as ethical and trusted positively influence their buying decisions

Cybersecurity and data ethics are now deeply intertwined. To maintain digital trust, businesses must consider both.

Despite the emphasis on data protection as a critical buying factor, only about 23% of businesses actively mitigate data privacy risks across their organisations.

How To Counteract Risk And Apply Data Ethics

Business leaders need to develop and implement a comprehensive framework that includes data ethics.

This framework should define the internal steps to mitigate cyber risk and maintain high customer satisfaction.

Implementing empathy and accountability throughout the organisation is crucial to maintaining a customer-focused approach to data privacy and security.

Technology will be instrumental in this framework, providing the tools necessary to incorporate privacy into business processes and protect consumers at all stages.

Solutions should enable robust and ethical data sharing without hindering productivity.

Essential features should include end-to-end encryption and multi-factor authentication to create a defence layer between cybercriminals and data storage units, alongside protecting sensitive customer communications.

Privacy is a fundamental human right in the digital age.

However, many organisations cannot confidently assure that their customer data is protected. By embracing data ethics, businesses can build sustainable models that prioritise privacy at their core.

References:

Data Ethics Explained, Harvard Business School, 2023.

How Much Data Is Generated Each Day?, World Economic Forum, 2019.

Corporate Intelligence, KPMG, 2023.

The Rise of Cybercrime: An Overview, Security Boulevard, 2022.

Why Digital Trust Truly Matters, McKinsey, 2022.

Reviewed By:

Sabrina McClune, 18.06.24

Sam Kendall, 18.06.24