As many of us are social distancing and isolating ourselves at home, we’ve become more reliant on the internet and digital communication channels to keep us connected to the outside world. Crisis scenarios like this offer new business opportunities, particularly in the digital innovation space, where fancy offerings at low prices are boosting. Simultaneously, a high volume of privacy lawsuits also emphasises that fundamental values such as data protection, privacy, and consumer trust are of major importance in times of crisis. The irresponsible or even unlawful use of customer data can have far reaching consequences for organisations, such as significant reputational damage. So how could financial institutions that hold an immense amount of personal data protect themselves against such data risk? Lisa Bechtold, Head of Data Risk & Digital Policy, Zurich Insurance Group, explores responsible data use, cultivating trust, and driving a successful digital transformation strategy.
Data is one of the most valuable assets an organisation can have and potentially has a tremendous impact on its long-term business success. Today, companies in every industry use data in various forms to make better business decisions. Due to exponential technological advancements, access to data analytics is no longer limited to blue chips. Instead, most players in the corporate sector are using data analytics in some capacity and are capitalising on data-driven insights. Extracting value from data does not only enable better informed business decisions. It also shapes the market strategy and improves products and services by tailoring them to the needs and expectations of customers, often combined with enhanced customer experience offerings. The rapidly evolving digitisation offers a broad spectrum of new opportunities to grow the business, increase its scale and efficiencies and embark on new journeys enabled by big data, advanced analytics, and cognitive technologies.
Many enterprises are currently transforming themselves into data-driven organisations. For such transformation, the intelligent and responsible use of advanced technologies such as artificial intelligence (AI) and big data is vital to fully leverage the value of the available data. However, organisations do not only need to know how to optimise the value of data. Organisations also need to have the capabilities to manage the associated data risks in a holistic, yet effective way.
Holistic data risk management
In the digital age, sound management of data and digital risk is crucial to enable the business to benefit from technological advances such as big data and AI. When managing data risk in line with a firm’s strategic priorities, it is essential to protect the confidentiality, privacy, integrity, and availability of business, customer, and employee data to ensure legal and regulatory compliance. Inappropriate data management can result in scenarios such as the loss of business opportunities, the misuse of data, data protection or privacy breaches as well as unethical utilisation of sensitive data, as well as data loss, possibly in connection with a cyber attack. If such risk materialises, core financial, operational, compliance, regulatory, and reputational implications can follow consequently. As cognitive technologies such as AI and advanced analytics have become ever more important, this article focuses on the safe, responsible and ethically desirable use of data.
Today more than ever, the safe and responsible use of business, customer, and employee data is paramount. On the one hand, this is due to recent corporate scandals involving the misuse of sensitive data. On the other hand, the digital age is accompanied by eroding standards of truth and trust in society, partly triggered by phenomena such as fake news spreading via social media, popularity of deep fakes, and other forms of digital fabrications. Society calls for fundamental human values such stability, security, and trust. As a result, a high bar has been set for the corporate sector to live up to new standards for the safe and responsible use of data.
Responsible use of data as a key priority
Companies must integrate the responsible use of data and the enabling technologies into their business strategy and ensure alignment with their corporate values. Integrating such thinking and mindset into the corporate DNA often proves challenging, and implementation efforts need to be complemented by meaningful guidance, training, and risk advisory for employees. Effective management of data and digital risks triggered by cognitive technologies and advanced analytics requires an enterprise-wide framework to provide risk and governance advice, internal policies, as well as effective monitoring, and assurance to ensure the trustworthy use of data end-to-end. Establishing such a framework is particularly challenging these days since laws and regulations in the field of data use and ethics in connection with advanced technologies are only emerging. When searching for best practice guidance, we are facing an impressively active global public policy debate: the G20, OECD, European Commission and numerous other institutions and organisations as well as the corporate sector have published or are working on guidelines, principles or self-commitments on the trustworthy use of data and advanced technologies. In particular, the European Commission has taken a highly visible leading role and underpinned its strategic direction with its recent White Paper on Artificial Intelligence, labelling the envisaged regulatory framework for trustworthy AI as an “ecosystem of trust”.
Trust as the key driver for a sustainable digital future
As a responsible and sustainable organisation, building trust and inspiring confidence in a digital world with both internal and external stakeholders will likely be a key differentiating factor for success. In today’s environment of uncertainty and change, the stakes around trust have never been higher. Data-driven organisations will recognise that “trust” is an asset that has become more important than ever for driving sustainable business value and brand loyalty with customers.
Trust can be gained and maintained in many ways. Organisations can make trust more tangible by acting as a custodian (by keeping customer data safe), as a fiduciary (by using customer data to the benefit of their customers), or as a service provider (by extracting value from data to address customer needs). Using trust as a differentiating factor requires companies to focus on enhancing the customer journey and enabling adaptive governance structures and architectures for data, cybersecurity, and business resilience. This may be particularly true for the financial services industry where BigTech is attempting to enter established markets and domains. Overall, the responsible and ethical use of data will not only promote trust in financial services. It will lead the way for a sustainable digital future.