How Getting Data Ethics Right Can Improve Business Outcomes

Today’s world is data-driven. Every industry recognizes that the underlying data analytics must improve business performance, from informing customer experiences to reorganizing internal processes. With this powerful tool, however, every organization has a responsibility not only to use data to its own advantage, but to use it in a manner that is ethical to all parties involved.

I recently met with Felix Van de Maele, co-founder and CEO of data intelligence company Collibra, to discuss his thoughts on how companies can use data ethically and how this ultimately benefits a business’ bottom line. Collibra’s solution, Data Intelligence Cloud, brings flexible governance, continuous quality and built-in privacy to all types of data.

Gary Drenick: What does the term “data ethics” mean? Why is it important to protect consumer data? What are the foundations of proper and ethical data management?

Felix VanderMeer: Today, data is the lifeblood of our global economy. The vast amount of data available in every industry unlocks enormous possibilities and benefits. Organizations know that being able to use data-driven insights strategically is critical to future success.

However, you could say that data lacks a voice of its own. Instead, the people and organizations that use the data determine what voice the data will have—how it will be used to make decisions, and whether it will be used ethically. These decisions can have lasting effects on businesses and individuals, and whether these end results are positive or negative depends on the ethical decisions made by those who use the data. This is a huge responsibility.

At the heart of data ethics, ethical organizations aim to use data to benefit others and avoid harm. If you’re already actively thinking about how to implement data ethics within your company, you’re already developing a framework to drive thoughtful, responsible use of data.

Drenick: How does data mishandling affect/harm consumers? How does poor data management affect your company’s reputation and bottom line?

VanderMeer: While there are privacy regulations like GDPR and CCPA, the US has no data privacy and regulations at the federal level. This is concerning when you consider that some companies have vast amounts of consumer data at their disposal. Often, personal data is used to develop highly targeted advertisements and customized experiences on social platforms, but without proper regulations in place to ensure that companies use consumer data in an ethical manner, it is difficult to implement standardized guardrails.

Mishandling of data can harm consumers, often by making customer data vulnerable to malicious actors through data breaches. When an organization does not have the proper security measures in place to protect sensitive data, they expose consumers to privacy violations that can lead to fraudulent charges, identity theft, and more attacks in the future. According to a recent survey by Prosper Insights & Analytics, consumers are well aware that their privacy may be at risk, with more than 60% saying they are concerned about their personal identity when shopping online.

Unethical data management that negatively impacts customers will directly impact a business’ reputation. When customers no longer trust organizations to respect their personal data, they take their business elsewhere.

Even in minor breaches, companies can face frustrated customers who may end their partnerships, and frustrated employees who need to act quickly to repair damage and institute better security measures. Improper handling of data can result in financial losses beyond reputational damage. In fact, the average cost of a data breach this year hit an all-time high of $4.35 million, according to IBM’s 2022 Cost of Data Breach report.

Drenick: What can companies do to protect customer data and adhere to data governance best practices? What does this look like in practice?

VanderMeer: While many businesses intend to implement best practices, adoption rates are not as high as they should be. Building a solid data governance framework takes time, and it’s an investment that takes time to realize ROI. Ultimately, leaders need to invest the time, tools, and talent needed to build a strong data culture and develop appropriate data ethics practices within their organization.

The key to managing data ethically is taking transparent action. Companies must clearly communicate the type of consumer data they collect, how it is collected, and how it is used. Organizations should build transparency into their data policies outlining the terms and conditions set with users, and all employees should be trained on these policies. Before mistakes occur, develop a communication strategy to ensure you are prepared to take responsibility for any mistakes.

Drenick: What can consumers do to protect their data and evaluate companies against ethical data practices?

VanderMeer: Consumers who want to protect their data and ensure they do business with companies that use it ethically should do their own research first. Many consumers don’t know how their data is being used, so they should first check the company’s transparency policy and any information on their website about how they use customer data.

Customers also have many simple and practical ways to limit the amount of data companies collect from them. According to a recent survey by Prosper Insights & Analytics, 45% of consumers protect their digital privacy by denying tracking permission to their mobile apps. Other methods can include turning on private browsing mode and changing your social media settings.

Drenick: What role does data intelligence play in protecting consumer data privacy?

VanderMeer: Data intelligence is the ability to understand and use data in the right way, and part of doing it right is using it ethically. Implementing data intelligence ensures that an organization’s data can be trusted and used in a compliant manner. Companies that incorporate data intelligence into their data strategies will also prioritize data protection and consumer privacy. This benefits both companies and consumers by building consumer trust and helping organizations avoid regulatory fines and penalties.

An important way to intelligently protect consumer privacy is to take a proactive approach to data ethics. Responding appropriately to a data breach is good, but it is far better to take proactive steps to ensure compliance with all data protection policies, set internal policies, prioritize transparency and monitor data usage to prevent potential breaches. Having good data ethics and governance will allow organizations to maintain consumer trust and be more resilient in the long run.

Drenick: Thank you for taking the time, Felix, and sharing the benefits and best practices of prioritizing data ethics within your organization.