Data ethics for financial services companies
Well-known companies like Goldman Sachs Group Inc. have been accused of bias and discrimination when processing data in their algorithms. As a result, companies such as Microsoft and IBM are championing artificial intelligence (AI) and data ethics strategies to ensure data is handled ethically. Regulators are increasingly scrutinizing data ethics practices, further increasing the relevance of the topic.
Digital risk not only encompasses cybersecurity and data protection, but has also expanded into a new field: data ethics. Data ethics involves the study and evaluation of moral issues related to data, algorithms, and related practices in order to formulate and reinforce morally sound solutions. Specifically, it takes a closer look at moral obligations in the collection, protection, and use of structured and unstructured data that can negatively impact people and communities. This includes teaching and advocating for concepts of right and wrong behavior, transparency, and defensibility of actions and decisions made by automated/artificial intelligence (AI) with respect to general and personal data. Data ethics is of great importance to analysts, data scientists, and information technology professionals, among others. All companies that manage, use and process data must be familiar with the basic principles of data ethics.
Recently, the media have increasingly reported breaches of ethical principles. As a result, financial services companies are striving to lead the way in data ethics. If a financial services firm is perceived to be careless with data, there can be significant consequences, such as loss of customer trust, investigations by regulators, and investor backlash. These risk factors have led to data ethics becoming an issue that no financial services company can ignore. The 2020 Avanade Digital Ethics Study found that 70 percent of financial services firms plan to increase their data ethics investments in the coming years. A 2022 HWZ survey on digital ethics in Switzerland showed that 80 percent of participants across industries have or are working on a data strategy focused on data ethics. These results show that high investment in data ethics is being considered as a response to growing digital risks.
Below are some suggestions for operationalizing data ethics in financial services organizations:
Eraneos can support you in defining a framework for data ethics and anchoring it in your organization. We can offer expertise in the following phases:
- Review - We help you assess your current data ethics strategy, including relevant policies, procedures and concepts.
- Design - We help you design and develop an ethical strategy framework that includes data ethics principles, governance, guidelines, culture, and auditing.
- Monitoring - Once your data ethics strategy framework is in place, we help you define and monitor key performance indicators (KPIs) to measure the adoption and effectiveness of the data ethics strategy.
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