How Getting Data Ethics Right Improves Business Outcomes

Today’s world is data-driven. Every industry recognizes the potential data analysis has to improve business performance, from informing customer experiences to restructuring internal processes. However, with this powerful tool comes a responsibility for each organization to not only use data to their advantage but to also use it in a way that is ethical for all parties involved.

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

Gary Drenik: What does the term ‘data ethics’ mean? Why is it important when it comes to protecting consumer data? What are the fundamentals of proper, ethical data management?

Felix Van de Maele: Today, data is the lifeblood of our global economy. The vast quantity of data available across every industry unlocks massive possibilities and benefits. Organizations know that being able to strategically use data-driven insights is crucial to future success.

However, you could say that data lacks its own voice. Instead, it’s the people and organizations using data who determine what voice the data will take on – how it will be used to make decisions and whether or not it will be used ethically. These decisions can have lasting implications on businesses and people, and whether those end results are positive or negative depends on the moral decisions made by those using the data. It’s a massive responsibility.

At the heart of data ethics, an ethical organization is one that will aim to use data to benefit others and avoid causing harm. If you are already proactively thinking about how data ethics is implemented within your company, you’re already well on your way toward developing a framework to drive thoughtful, responsible data use.

Drenik: How does the mishandling of data impact/harm consumers? How can poor data management affect your company’s reputation and bottom line?

Van de Maele: While there are privacy regulations like GDPR and CCPA, the U.S. does not have data privacy and regulations in place at a federal level. This is concerning when considering that some companies have a wealth of consumer data at their disposal. Typically, personal data is used to develop highly targeted advertisements and customized experiences on social platforms, but it’s difficult to enforce standardized guardrails without regulations in place to ensure that companies use consumer data ethically.

Mishandling data can harm consumers, often through data breaches that leave customer data vulnerable to malicious actors. When an organization doesn’t enact proper security measures to protect sensitive data, they open consumers up to privacy violations that can lead to fraudulent charges, identity theft, and more attacks in the future. Consumers are well aware of the potential threat to their privacy, with over 60% reporting they are concerned about their personal identity when shopping online, according to a recent Prosper Insights & Analytics survey.

Unethical data management that causes negative impacts on customers will directly affect a business's reputation. When customers no longer trust an organization to respect their personal data, they will take their business elsewhere.

Even in a lesser breach, companies may face frustrated customers who may terminate the partnership, as well as disheartened employees who will need to move rapidly to repair damages and enact better security practices. Mishandling data will likely result in a financial loss on top of a damaged reputation. In fact, the average cost of a data breach reached an all-time high of $4.35 million this year, according to IBM’s 2022 Cost of a Data Breach report.

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

Van de Maele: While many businesses intend to put best practices in place, adoption is not yet where it should be. Building a solid data governance framework takes time, and it’s an investment that can take time to realize ROI. Ultimately, it’s up to leaders to invest the needed time, tools, and talent to build a strong data culture and enact proper data ethics practices within their organizations.

The key to managing data in an ethical way is to act transparently. Companies must clearly communicate the type of consumer data they collect, how it’s collected and how it’s being used. Organizations should build transparency into their data policies, outlining the terms and conditions set with users, and employees should all be trained on these policies. Before errors are made, put communication strategies in place to ensure you are ready to take accountability for any mistakes.

Drenik: What can consumers do to protect their data and evaluate companies based on ethical data practices?

Van de Maele: Consumers looking to protect their data and ensure they’re doing business with companies that use data ethically should first conduct their own research. Many consumers are unaware of how their data is used, so they should start by reviewing companies’ transparency policies and any information on their websites about how they use customer data.

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

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

Van de Maele: Data intelligence is the ability to understand and use your data in the right way, and part of using data properly is using it ethically. Implementing data intelligence ensures that an organization’s data is trustworthy and used in a compliant manner. Companies that incorporate data intelligence into their data strategy will also prioritize data protection and consumer privacy. This benefits both company and consumer by building consumer trust and helping organizations to avoid regulatory fines and penalties.

An important way to intelligently protect consumer privacy is to take a proactive approach to data ethics. Reacting properly to data breaches is good, but proactively taking steps to ensure compliance with all data protection policies, setting up internal policies, prioritizing transparency and monitoring data usage to prevent potential breaches is far better. Having good data ethics and governance already in place will allow organizations to retain consumer trust and be more resilient in the long run.

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