Today, when both the value and volume of data are growing at an unprecedented rate, data privacy becomes a pressing issue. In recent years, many governments have started to recognize the public call for more stringent and definitive legislation that would improve personal data protection and privacy. This forced companies to revisit their approaches to data analytics services and adapt to new regulatory frameworks.
Basically, many companies treat data privacy as just a matter of compliance. However, data privacy can also become a competitive advantage and increase organizations’ market value. On the face of it, there should be a direct correlation between the investment in data privacy and the company’s value, but it’s more complicated than that.
There is a clear tendency in the business world to invest more in consumer data protection, with companies assuming such initiatives should be viewed as inherently appropriate by consumers. However, a consumer’s perception of data privacy can be quite counterintuitive. More often than not, individuals’ intentions to protect their own data don’t correlate with their actions online.
For example, a recent study by National Bureau of Economic Research reveals that users with privacy concerns share data with third-party mini-programs on the Alipay platform to the same extent as people who are willing to share their data. This doesn’t mean that consumers don’t care about how much of their data is collected and analyzed, but that their attitudes are inconsistent at best.
On the one hand, collecting less data equals missing out on business opportunities. By reducing the amount of collected data, a company decreases its chances to better understand the target audience, personalize services, and increase profits down the line.
On the other hand, unthoughtful data privacy practices aimed at squeezing the most out of consumer data will inevitably lead to public outrage. The exponentially growing popularity of various social movements that encourage people to put higher value on personal data urges companies to stop considering data privacy as a solely regulatory issue.
This is why being in tune with public opinion on data privacy is paramount to finding just the right amount of data to collect. Most importantly, both public and shareholders’ opinions on data privacy are frequently changing, meaning that organizations have to adjust their approaches on the fly.
Contrary to many other business strategies, following what other companies are doing in this context is the best course of action. Many tech giants have figured out the importance of data privacy the hard way and have been keeping their ears to the ground ever since. Mimicking their strategies is a safe bet.
What is more, to ensure data privacy, companies need to establish a data governance framework and define data-related roles and responsibilities. Again, it’s critical to understand that data governance is not a project with a clear end goal but a continuous program, which requires regular assessments.
The pace of technological advancement is too fast for our society to figure out the right data privacy approach both from ethical and business standpoints as the lines between public and private are getting continuously blurred. Consumers claim that they care about how their personal data is used more than ever before while putting a surprisingly low value on it. A study published in Journal of Consumer Policy reveals that consumers are willing to share various types of their personal data for 80$ on average. Interestingly enough, an average consumer is also willing to pay only 5% per month to keep personal data private.
It’s critical to note, however, that while people may struggle to put a value on their data, they are increasingly concerned if companies can keep their data safe. The rate of cyber attacks has skyrocketed in the past few years, with the most notorious ones making headlines. Naturally, this puts cybersecurity at the top of corporate agenda. The discussion about the right approach to data privacy becomes irrelevant when companies fail to protect data from wrongdoers.
When it comes to fighting cybercrime, collective efforts tend to be the most efficient. Both public and private stakeholders should cooperate and establish partnerships to protect data, or cybercriminals will continue to exploit weak or absent risk governance practices. In a nutshell, companies should make sure to employ robust cybersecurity measures and incorporate them into their data privacy approach.
— Andrey Koptelov, Innovation Analyst, itransition