Data ethics: What it means and what it takes

Viewed in McKinsey Digital

Management consulting giant McKinsey, founded in 1926, has nearly unmatched access to the world’s largest companies and their executives.

To their credit, they also routinely solicit the views of these companies and executives— and then share these perspectives with those seeking to address current opportunities or challenges in their own industries and organizations.

Every company is a data company

In this September 23 report, they tackle the issue of data ethics, which in 2022 is not just a central issue for companies directly in the data business. Reason: “Now more than ever, every company is a data company,” McKinsey writes, and that means companies now need to address with great seriousness and urgency their respective data ethics practices.

Executives’ opinions and experiences

As the firm often does in the development of their influential reports, they began by tapping the opinions and experiences of executives. In this case, they write, “we began to explore these questions by speaking with about a dozen global business leaders and data ethics experts.” These executives, they learned, communicated that, even in their own companies, data security and related ethics issues demand great and broad scrutiny and deliberation.

Over 150 times more data volume produce daily than 10 years ago

Reason: “By 2025, individuals and companies around the world will produce in excess an estimated 463 exabytes of data each day, compared with less than three exabytes a decade ago, according to IBM Research.

As companies and their executives begin to tackle data ethics with the seriousness that it now demands, executives interviewed by McKinsey agree on some potential stumbling points that they will need to be avoided. Three central ones:

Data ethics is every executive functional responsibility

Executives need to avoid viewing data ethics, including data privacy and security, as a technology concern exclusively and instead embrace it as an executive functional responsibility.

Are they doing that now? Well, not exactly, McKinsey reports. In a survey conducted last year of 1,000 companies, only 27 percent reported that their data professionals were routinely checking for skewed or biased data.

Nor have companies to date established the internal organizational approach needed to ensure that data is managed ethnically, competently, and securely; a mere 17 percent, for instance, have established internal data governance committees that include risk and legal professionals.

Data usage rules need to be established and shared

Companies, once they establish their data usage rules, need to communicate these rules internally and externally, or they run the risk of never securing the public trust needed in an era where data collection abuses and breaches are real risks and public concerns.

Algorithms should place at risk any constituency

Finally, as companies accelerate the development of AI and other technical and data initiatives, they need to ensure that algorithms are not simultaneously endangering or placing at risk any particular constituency—including those who might be victimized by years from now by data collected today.

That means, this McKinsey report argues, that companies need to start with the question of how data might be misused or abused and ensure it is guarded from those risks. 

In the day to day pressures of 21st century business life and pressures for quarterly and annual results , thinking about the future is often sacrificed, which is why data ethics now requires both pro-active assessments and dedicated  cross-functional experts functioning as teams within organizations.

As data collection grow, chances of misuse grow

As data collection grow—and it is growing rapidly, chances for misuse or abuse only grow, which makes this an urgent corporate concern.

A personal organizational leadership function for every CEO

Policies and processes that are ethical and forward-looking and subject to scrutiny by a broad range of organizational functional experts is the way to ensure that data ethics policies are developed, monitored, and measure systematically and correctly—and, then, at a CEO level embraced as a personal organizational leadership function for which CEOs, not just data experts, will almost certainly be held to account.

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