Data Compliance: An Integral part of Business Analytics
“It takes 20 years to build a reputation and 5 minutes to ruin it. If you think about that, you will do things differently”
As data becomes the new currency of the world, new rules are drawn on business analytics and one of the key rules is on data compliance. What exactly is data compliance and how does it impact business analytics? In simple words, data compliance is compliance to laws and regulations, to business rules, and to ethics. Often, businesses capture data for legal and regulatory reasons. Compliance is also required while adhering to internal business rules and industry standards, and this is typically the operational needs. Lastly, ethics in business are the moral principles that govern the behavior of the business when conducting business activity. In today’s data-driven world where increasing business decisioning is based on data, data ethics come into the forefront as one of the key drivers for the business. Business ethics typically prescribes what business ought to do, usually in terms of rights, obligations, fairness, and impact on society. In this backdrop, the data compliance framework for a business enterprise is as shown.
Most organizations believe that compliance is an afterthought in analytics. But instead, compliance should be considered upfront and all stages in the analytics project. No matter the size, industry, location, or level of profitability of an organization, compliance is one of the most important aspects of the long-term subsistence and being a responsible business. Today, businesses focus on the triple bottom line (TBL), an accounting framework on social, environmental and financial aspects in their commitment to sustainable development goals (SDGs). In this backdrop, if a business enterprise aspires to be a data-driven organization with SDGs, it ought to follow data compliance throughout the data lifecycle; if not it will affect the very existence of the business itself.
Take for example Nexen, an oil company based in Alberta, Canada. When Nexen spilled over 30,000 barrels of crude oil in July of 2015 in Western Canada, the Alberta Energy Regulator (AER) ordered the immediate suspension of 15 pipeline licenses issued to Nexen due to lack of maintenance data records. This is a lack of compliance data to the regulations set by the provincial energy regulator. In 2017, hackers accessed hundreds of millions of customer records from the credit reporting agency, Equifax. This is an example of a lack of compliance with the security standards as the company later spent $1.4 billion to transform the technology infrastructure. The Facebook–Cambridge Analytica data scandal resulted in Facebook losing $35 billion in market value following reports that Cambridge Analytica had unauthorized access to 50 million Facebook user accounts. This is an example of a lack of compliance with the privacy regulations and data ethics from both Facebook and Cambridge Analytica. Bottom line is that if data is not managed, governed, and secured well, the business can have a massive financial loss and irreparable damage to the brand. Hence analytics team should look at compliance elements i.e. compliance to laws and regulations, compliance to business rules and industry standards, and compliance with ethical aspects as an integral part of business analytics.
So, how does a company realize or achieve data compliance in analytics? At the highest level, data compliance is the responsible and sustainable use of business data. While no or little data in the business is a problem for business, often a lot of data is also a problem if compliance aspects are not addressed properly. The scale, pace, and ease with which analytics can be conducted today in business completely change the compliance framework of data management. In this regard, data considerations for compliant analytics can happen by addressing three main capabilities.
