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Data Risk

Trust is a fragile concept based on perception and belief. Losing the trust of an organization's customers is a risk every corporate leader dreads. Data risk is the possibility of losing, compromising, or misusing data. Poorly managing this risk is the fastest way to loose the trust of your customers. Data issues (e.g, breaches) can have serious consequences, such as financial losses, reputational damage, legal liabilities, or regulatory penalties.

Data risk affects individuals, organizations, and society in myriad ways. Some impacts include:

  • Privacy Breaches: Unauthorized access or disclosure of personal or sensitive data, such as health records, financial information, or biometric data.

  • Minor Identity theft: Fraudulent use of someone else's data, such as name, address, social security number, or credit card number.

  • Minor Data corruption: Accidental or intentional alteration or deletion of data, resulting in errors, inconsistencies, or loss of information.

  • Minor Data theft: Data theft for malicious purposes, such as espionage, sabotage, ransomware, or cyberattacks.

  • Minor Data misuse: Improper use of data for purposes that are unethical, illegal, or harmful, such as discrimination, manipulation, or exploitation.

Data risk is not only a technical issue but also a legal, ethical, and social one. Misusing data can seriously affect individuals' and groups' rights, freedoms, and well-being. How well an organization manages its data risk impacts its ability to achieve business goals, protect assets, and comply with obligations (i.e., regulatory, compliance, and shareholder value).

Data risk can also impact an organization's perceived trustworthiness, competitiveness, and innovation in the market. Today, people and business leaders are more aware of the impact of data use violations and avoid working with organizations that either need to take it seriously or prove their ability to ensure reasonable risk mitigation.

Therefore, it is vital to understand and manage data risk effectively. This requires a comprehensive approach that involves, at a minimum, the following:

  • Data governance: Establishes policies, standards, and procedures for the collection, storage, processing, and use of data.

  • Data security: Implements technical and organizational measures to protect data from unauthorized access, disclosure, modification, or destruction.

  • Data quality: Ensures data is accurate, complete, consistent, and timely (up-to-date).

  • Data ethics: Applies ethical principles and values to the use and analysis of data.

  • Data literacy: Develops the skills and knowledge to access, understand, evaluate, and communicate data. In a digital world, Data Literacy is a required competency for most, if not all, employees, partners, vendors, and anyone else responsible for working corporate data.

By adopting these practices, you can reduce data risk and maximize data value. You can also contribute to a more responsible and trustworthy data ecosystem that benefits everyone.

How can you manage data risk effectively?

The first step to managing data risk is identifying and assessing the sources and impacts of data risk in your organization. You need to understand your data, where it is stored, how it is used, who has access to it, and what threats or vulnerabilities it faces.

The second step is implementing appropriate controls and measures to mitigate data risk. You must establish policies, procedures, and standards for data governance, security, privacy, quality, and compliance. You must also train and educate your staff on data risk awareness and best practices.

The third step is to monitor and review data risk regularly. You need to measure and report on the effectiveness of your data risk management activities and adjust them based on changes in your environment, regulations, or business objectives.

By managing data risk proactively, you can reduce the likelihood and impact of data incidents and enhance the value and performance of your data assets.

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