Understanding Data Ethics: What It Is and Why It Matters

The fintech industry is booming and with it comes a growing concern about data ethics. As companies collect more and more data about their customers, it is important to ensure that this data is used ethically and responsibly.  

Businesses are increasingly looking to optimize their data for better decision-making, but they often overlook the ethical concerns that arise when handling data.  

In this blog post, we will discuss data ethics, why data ethics matter and the different ethical concerns that arise when it comes to data. 

What is data ethics? 

According to Catherine Cote, a marketing coordinator at Harvard Business School Online, data ethics is a moral obligation of gathering, protecting and using personally identifiable information. 

This means companies should be transparent about how they collect, use and share personal data in a way that is ethical and responsible. 

This includes protecting the privacy of individuals and ensuring that their data is used for legitimate purposes and not for illegal activities and threats. 

To better understand how it works, let's look at these four ethical principles that companies must consider when gathering, protecting and using data: 

• Privacy: Companies should not collect or use personal data without the individual’s consent. 
• Fairness: Data should be used in a fair and unbiased way. 
• Transparency: Companies should let individuals understand how their data is being used. 
• Accountability: Organizations should be accountable for how they use data and should have clear policies and procedures in place to protect data privacy.
   

Read: What are the Best Practices in Data Governance?

Why Data Ethics Matter? 

In a world where data is increasingly being used to make decisions about people's lives, companies are obliged to ensure that all data they collect is used ethically. Just imagine the amount of data that people entrust to companies just to get access to their personal information. 

Isn't that something that companies should be thankful for and should do their best to maintain that level of trust? 

Here are some of the unethical uses of data: 

• Data can be used to discriminate against people. For example, companies could use data to deny people jobs, loans or insurance. 

• Data can be used to manipulate people. For example, companies could use data to target people with advertising that is designed to exploit their weaknesses. 

• Data can be used to invade people's privacy. For example, companies could track people's movements or collect information about their personal lives without their consent. 

However, here are some tips on how companies should use data properly and ethically: 

• Get people's consent before collecting their data. 
• Use data only for the purposes that they have disclosed to people. 
• Protect people's data from unauthorized access. 
• Delete people's data when they no longer need it. 

Read Next: Accounting Data Analytics: Why Should Firms Bother with Data?

Ethical Issues in Data Collection 

According to authors Danica Facca, Maxwell J. Smith, Jacob Shelley, Daniel Lizotte and Lorie Donell, here are some of the most common ethical issues that arise during data collection. 

• Consent: Companies should fully inform all individuals before collecting their data. This consent should be informed, meaning that individuals should be aware of what data is being collected and how it will be used. 

• Confidentiality: Individuals have a right to privacy and this right should be respected by the companies when collecting data. Companies must protect the confidentiality of all data collected in a way that minimizes the risk of privacy breaches. 

• Security: Companies must also take steps to protect data in a secure manner to prevent unauthorized access or disclosure.
  

The Bottom Line 

Companies should be familiar with the ethical guidelines that govern data collection. These guidelines can be found in a variety of sources, including the Fair Information Practices Principles (FIPPs) and European Union General Data Protection Regulation (GDPR). By following these guidelines, companies can ensure that their data collection practices are ethical and that the rights of individuals are protected. 

If you're company is stuck with data concern, let D&V Philippines lend you a helping hand. Talk to our experts today to find out more about our data analytics and business intelligence-based accounting services. 

You can also download our whitepaper, The Rising Frontier: Harnessing the Power of Business Analytics, to get an overview of how we can help you.