Information Management – J. Howard, CDO & CPO

CDO, CPO, IAPP, Information Management and Governance, Information protection, Privacy

Looking Ahead: The New Operating Model for Business

May 2, 2020May 2, 2020 James Howard

COVID-19 has had a horribly disruptive effect on almost all people and aspects of society. This paper starts a dialog around an admittedly tiny aspect of that and a view to the future. It in no way should be seen to marginalize or trivialize the pain and suffering endured by the millions of people directly impacted by the pandemic.

On May 1^st, CNBC published this article that discusses how some businesses are re-evaluating their need for physical office space in light of their experience with a majority of their workforce working remotely.

The rapid shift to work-from-home has served as a catalyst for change. Many years ago, when video conferencing first became available, companies started to invest in equipment that was office-bound, hoping to reduce business travel. That never happened because the technology was temperamental, brands didn’t interoperate very well, there were never enough facilities, and the equipment required expensive point-to-point T1 lines.

Since then, there were advances in the technology along many orientations, including high speed internet to homes, corporate adoption of laptops, smartphones, and importantly, audio conferencing. This enabled a shift toward work-from-home, and corporate shared office space – “hoteling” (universally adopted by consulting firms and hated by employees), smaller offices/cubicles sold euphemistically as “open concept” workspaces. But many were still reluctant to use video (Dilbert summed it up well with a series of comics depicting people “working from home” taking video calls wearing their bathrobes). Workers were far more comfortable with audio conferencing than video, but it still did a lot to get companies and workers more used to remote working.

The needle moved further toward remote workforce with the dramatic increase in off-shoring, leverage of contractors which in itself lessened the feeling of permanence of employment, and perhaps contributed to workers feeling more comfortable as individual contributors working from anywhere. Paradoxically, there was a simultaneous shift toward urban living, as the number of young people wanting to drive or commute went down, which one might have thought would shift them back to offices.

Powerful Disruptor

All these shifts were gradual, and the net result was tidal shifts in the work model. Leave it to nature to provide a dramatic disruption, which has resulted in remote working suddenly accounting for 95+% of non-essential workers. The points raised in the CNBC article are not at all surprising, given how the experts are bracing for periodic reemergence of Corona, but are also supported by:

The high cost of commercial real estate and the need to manage costs
The remarkable advances in technology enabling remote working
The quality of life impact of time-wasting commutes

A shift to predominantly remote working has immediate benefits, including the opportunity to hire the most qualified workers without regard to their physical location, which helps address challenges businesses have faced hiring the right talent. It also has consequences, such as the inevitable glut of empty office space. The sudden reduction in the concentration of office workers has a significant impact to businesses relying on them – restaurants, shops, laundry, shoe-shine, even metropolitan transportation – as large portions of their customers stop coming.

Opportunities

In the past, there have been dramatic disruption to business leading to the shrinkage or elimination of entire industries. Yet over time, business comes charging back. Before Corona, unemployment was at record lows, and companies were clamoring for skilled workers. This is after gloomy predictions of unemployment after waves of off-shoring everything from manufacturing to call centers to highly skilled workers.

What has to happen for remote working to become as effective as working from a managed location?

Physical space: Many people don’t have home offices and take over the dining room table instead. This isn’t sustainable, since asking people to shift from a company managed location to home involves a level of disruption and the only financial beneficiary is the employer. Wouldn’t it make more sense for the employer to provide each employee a remodeling budget (funded by savings resulting from reduced commercial real estate costs)? Small contractors could build-out home offices based on guidelines or specifications defined by the employer.

Technology infrastructure: When someone works in an office, the employer provides a laptop and a portfolio of business applications, but also the infrastructure to provide access to those applications – physical connectivity, wi-fi, deskside support. They establish standards that they are able to support in a cost-effective fashion. This needs to be replicated in some fashion at home, at least for a portion of the workforce. It’s not realistic to expect the worker to solve all their home technology issues and not impact their efficiency. Solution? A ramp-up of home technology service-providers (e.g., Geek Squad) who set up and support home offices.

Improved wireless: There is a race underway to roll out 5G infrastructure and public wi-fi 6 that promise high-speed performance that rivals (or beats) home-based/cable internet access. This may be a boon for remote workers and their employers because it simplifies the support model by eliminating the so-called “last mile” connectivity to the individual house in favor of a more controlled infrastructure using transmitters on towers in public spaces.

Comforts and conveniences: As people get used to working remotely, their appetite for convenience goods and services will likely return. This means the retail services that had been located near office buildings will cater to home-based workers. To be sure, it won’t look the same, given that the density of customers is different. There will be more home delivery or curbside service. Will it be the same in terms of volume? Probably in an overall sense, but the concentration will differ. But it seems reasonable that the businesses that can cater to distributed remote workers will benefit.

Challenges – Privacy and Data Protection – a tiny slice

There is no doubt that as with any fundamental disrupter, there will be challenges to be met before we move to equilibrium – the so called “new normal”. Among many others, information protection and privacy faces challenges. Some years ago, a colleague authored a prescient paper entitled “Privacy in a Pandemic” that explored the reasonable tradeoffs to be made when balancing individual rights against the needs of society, famously captured by Spock as he sacrificed himself believing “the needs of the many outweigh the needs of the few… or the one”. But the new equilibrium has implications for privacy and data protection in a more corporate setting. While privacy regulation accommodate these priorities, privacy and data protection programs will have to re-calibrate their risk assessments and place new weight on risks made more prominent by the shift away from office-based workers, to one where the line between personal life and professional activity is blurred to the point where you can hardly tell the difference. Clear desk policies went from being a constant real and philosophical debate to now being completely unenforceable, and therefore mostly moot. Implementing sound technical controls that don’t disproportionately interfere with the ability to work will take time, and likely require new technology deployments.

Understanding purpose: A key enabler to pivoting data privacy will be a mature data governance program. Making assumptions around higher level enterprise controls is no longer safe. Instead, knowing the nature and location of data is far more important in order to protect while enabling use. Providing more discrete permissions around the use of data will help lessen the risk of loss and unauthorized disclosure. Understanding the purpose behind proposed use of data will enable assigning more discrete permissions. Since preserving privacy is a lot more than just ensuring protection, the philosophy of understanding purpose also helps ensure appropriate use of data.

Fundamentals: Implementing new controls will take time and carries the risk of creating more frustration and confusion that benefit until the edges are smoothed out. Privacy leaders should step back and consider the full breadth of their programs, leveraging all techniques to manage risk while avoiding unnecessary disruption. An effective awareness program, for example, can go a long way to encouraging people to make safe decisions when handling data.

Summary

COVID-19 has created havoc in unprecedented ways, and has affected the lives of billions of people. The human toll cannot be measured, and the suffering by so many should not be swept aside. Experts are working through the optimal medical strategies while economists are still trying to model the short, medium and long term impacts to business. Entire books will be written and college classes will be structured around the Coronavirus pandemic. This paper has taken a very narrow slice of that and will hopefully start an open-minded dialog around how to help enable the future operating model for business. The dialog can and will continue in months and years to come.

CCPA, CPO, GDPR, IAPP, Information Management and Governance, Information protection, Privacy, Risk management

Why do we have such a hard time understanding, assessing and managing risk?

March 24, 2020September 9, 2020 James Howard

Introduction

Risk is a real concept that manifests across life. Within a business context, risk management is a valuable tool to help improve the probability of success. This paper explores the role of a risk manager, and is applicable across the board – whether business processes, technology, security, privacy, information or enterprise. The reader can easily extrapolate the ideas to any aspect of life.

Definition and Reporting

Definition of risk: The probability or threat of quantifiable damage, injury, liability, loss, or any other negative occurrence that is caused by external or internal vulnerabilities, and that may be avoided through preemptive action.

The key word is “probability” – the likelihood that the event will occur. In some instances, that can be calculated empirically, if all inputs and effects are known, where triggers can be identified – even if random (roll of the dice). Other times, probability can be estimated based on historical data around similar conditions (50% chance of rain).

Other times, especially in business settings, there are more variables than can be practically tracked and quantified. In those settings, Risk Managers use judgment to assess the risk of an event occurring. The risks are usually classified in a 3 or 5 point scale – say, red, yellow, green or severe, major, moderate, minor and insignificant. And the more knowledgeable the Risk Manager, the more insightful their assessment of risk, but it still remains a probability.

Challenges

Communicating risk gets complicated when we start factoring in risk mitigating strategies – avoid, reduce, transfer, accept—and reduction techniques – controls, TOD/TOE, residual risk, control risk, etc.

Even within the mitigating strategies there are grey areas – avoiding has consequences (lost opportunities), acceptance doesn’t mean the adverse event will occur, reduction doesn’t mean eliminate.

While some leaders claim they are comfortable navigating uncertainty, there is no question that business hates risk: markets react to uncertainty, and “punish” companies that operate with too many unknowns, and reward those that demonstrate clarity.

People publish dashboards and discuss numbers of controls, as though they were currency – more controls must be better – even though one good (strong) control could replace many poor (weak) controls. Even auditors are reluctant to rely on process controls and would rather verify every transaction instead (assuming they could).

So what’s the issue?

To some extent, we, as Risk Managers, are the issue. When asked about risk, we articulate it in our own language:

Risk Manager to Client (or internal business stakeholder): “there is a risk that such-and-such could happen that has these consequences”

Client: “how likely?”

RM: “moderate”

Client: (thinks: “huh?”) “what can we do about it”

RM: “implement x-y-z control”

Client: “will that make it go away”

RM: “implementing this control will reduce the risk, but it leaves a residual risk”

Client: (thinks: “huh?”) “Is that a ‘yes’? Why wouldn’t you just do it? And what’s that mean?”

RM: “here – sign this ‘residual risk acceptance document’”

Client: “ok – done”. (thinks: “thank god that’s over!”) Back to business as usual.

Let’s face, this exchange isn’t very helpful. The Client clearly doesn’t understand the risk as a potential impact to his/her business, and the “residual risk acceptance document” is a rubber-stamp.

Who owns the risk? Risk Managers say that their business process stakeholders own the risk, and the Risk Manager’s role is to explain the risk, options for control, and residual risk. However, it’s fair to say that the business process stakeholders often doesn’t truly accept their role, or if they did, they would engage in a more meaningful dialog. And the residual risk acceptance document effectively nullifies the dialog.

If the controls are effective, or for whatever reason, the risk fails to manifest, then what? How often does the client step back and acknowledge that RM did their job and issues were avoided? Or does the client question why the risk management exercise was undertaken? On the other hand, if an adverse event takes place, despite controls, does the client look at RM as though they failed? The cynical reader would point out that if the on-going processes of managing risk management were part of core operations, then you wouldn’t see a spike in RM funding after an event takes place; you might see some refinement or realignment, but not a huge uptick in funding…

An alternative approach

So the challenge is how to meaningfully communicate risk to leadership in a way that puts risk in a business context.

First, one must keep clear: generally speaking, risk can’t be eliminated if the business wants to undertake the activity that introduces the risk. That said, the Risk Manager can keep the following in mind as these points might promote meaningful communication:

Articulate the risk in familiar business terms (“speak English!”). Explain what would have to happen to trigger the risk. If you describe a chicken-little event without explaining the triggers, you might get dismissed.
Be realistic when describing the risk and the likelihood. The likelihood should include realistic related events.
Propose options for mitigating the risk, including avoid-reduce-transfer-accept. Bring a reasonable amount of research to present viable options, and be able to articulate the residual risk.
Understand appetite for risk at an appropriate level. A mid-level manager may have a different appetite for risk than the CEO.
Consider what kinds of risks needs to be escalated and to what level: Don’t present a risk to a CEO in a “Enterprise Risk Management” setting that should be addressed by a mid-level manager.
Be realistic in evaluating the consequences of the risk. Walk the stakeholder through understanding the various consequential outcomes to help determine an appropriate mitigating strategy.
Make clear who owns the risk. Get rid of “risk acceptance” documents – if a risk is significant enough to warrant action, it should be pursued. Risk Acceptance documents are an attempt to shift/assign responsibility, and if they are needed, then they will also be ignored in the post-mortem.
Acknowledge that business environments are dynamic, and events rarely unfold negative risks occur. People intervene. Processes engage. The outcome is rarely what was predicted when the risk was recorded. And the more catastrophic the risk, the more it morphs as it unfolds.

Many of these considerations apply in the post-mortem stage. One of the big challenges in the risk management community is one of appropriate hindsight. When evaluating changes to make in risk management in light of an event, it’s important to remember what was known and considered at the time risks were assessed.

The overarching themes in this article is that risk managers need to be realistic when articulating risks, consequences and controls. Risk managers must recognize they need to bridge the communications gap to their stakeholders by describing risks in business terms that will resonate.

Risk is a fact of life in every aspect of business. Bad stuff happens, and risk management is not risk “elimination”. Risk managers play a critical role, and by thoughtfully supporting their stakeholders, they can help business accelerate forward.

CDO, Information Management and Governance

When do data-dependent startups need a Chief Data Officer?

January 29, 2019January 30, 2019 James Howard

More and more startup companies are exploiting business opportunities tied to data. Whether developing data-dependent AI, re-imagining how to conduct familiar business processes in innovative ways, or intelligently designing and building datasets drawing from a growing variety of sources. The common theme for this class of business is the reliance on, and exploitation of, data.

In the earliest stages, startups are focusing their energy and time on creating their product or service. As they begin to mature, they naturally start to move toward a state where they are returning value to their stakeholders – profits. Perhaps they plan an IPO or to be sold to an investor, or some other larger entity.

This paper explores options and approaches that companies could consider to determine if and when they should appoint a Chief Data Officer (CDO), as well as their scope of responsibilities.

What kind of startups should prioritize appointment of a CDO?

At some point in their lifecycle, any company that is dependent on data will need to implement data management processes. These include processes to acquire, ingest, catalog, track and at some point, dispose of data. If the data is licensed or belongs to others, they will need to understand and comply with applicable obligations. They will need to create a data architecture, build repositories and apply appropriate controls to protect the data.

This description admittedly covers a lot of scope. So the following adds a little structure to the thought process:

Does the startup…

Handle large volumes of data?
Have data as core to it’s business, where completeness, accuracy and currency are critical?
Have products and services that are dependent of data, but are themselves not data products? (e.g., a website or app with data in the back-end vs. a licensed database)
Need data that is licensed or procured from others?
Use personal data (PII) or health data (PHI)?
Need to demonstrate data lineage or provenance?
Create new data, which has intrinsic value?
Live with the risk that a data incident could cause irreparable harm?

If the answer to many of these are Yes, then the company should consider appointing a CDO. Moreover, if the company wants to go public or be bought by another company – especially a public company where the transaction is material, the startup may be expected to demonstrate discipline around the treatment and protection of data, including documented policies and procedures. While a CDO isn’t necessary to do this, a CDO can design and implement practices and disciplines that will provide comfort in a due diligence setting, and integrate those disciplines into the daily business routine of the startup.

What value can a CDO provide to a startup?

Removing Barriers:

A CDO can provide a range of value to a startup. The CDO looks at a company’s business through the lens of data, and is sensitive to both the value (revenue) cycle as well as the risks and obligations, recognizing they go hand-in-hand. From this vantage point, they can enable the business by sourcing data and removing barriers, and can implement right-sized controls, proportional to actual risks and obligations. In effect. they can enable the data scientists – who seem to always “need…more…data…” – by providing relevant data, aligned with business objectives, where obligations and risks are managed elsewhere. Call it “unencumbered data”.

Scientific Method:

A CDO understands and recognizes the transformative potential of data, but also a balanced sense of proportion – especially when resources are scarce. By implementing structure around the activities of data scientists, a CDO can improve the chances that research will be fruitful and aligned with business objectives – with a necessary degree of transparency for stakeholders.

Protection and Compliance:

Most information that companies want to use will have some kind of requirements around handling. These will emanate from one or more of the following:

The data is regulated; many data projects will incorporate information about people — PII or PHI — likely controlled by one or more regulatory frameworks (e.g., GDPR, CCPA, GLBA, HIPAA/HITECH)
The data belongs to others and is governed by a contract or Data Use Agreement
The data is valuable and needs to be protected – these protections might be present as a result of the data being regulated.
A breach of the data could result in harm or loss, either to the company or to data owners, and should cause the company to respond in a certain way.

The CDO, who should understand the nature of data, can work with the CISO and counsel to implement proper controls to protect the data and comply with requirements.

Ethics:

By understanding the business and compliance perspectives of data, the CDO can provide perspective on the ethics of data use. So much of the new digital economy is exploring uncharted territory, where potential uses haven’t yet been imagined. There are lines not yet drawn around what industry should do, even though they can do it. Data-driven inventions can cause real or perceived harm to consumers as they disrupt industries. Whether its financial services, advertising/marketing, insurance, consumer electronics, or the breadth of online applications and properties. Data is central to these and a misstep can be catastrophic.

Optics:

Transparency is a cornerstone of the capital markets. And while data-driven startups are inventing new ways to conduct business and benefit consumers, much of it is betting on the future. With so many unknowns, appointing a CDO can help inspire confidence that a data-dependent startup is approaching their objective with a view to managing their data assets for the longer term.

What can a CDO do?

85% of the time, “Big Data” initiatives fail to meet their objectives, and 50% of startups fail in the first year. Start-ups relying on data can’t afford many false starts. The CDO can spearhead data management activities that can, in aggregate, reduce risk of project failure and increase the likelihood of achieving the desired outcome. These might include

Vision and strategy, involving leaders across the company
Data inventory
Data architecture
Data acquisition
Data maintenance and quality
Data retention and disposition,
Risk assessments, protection and compliance processes

While these are not necessarily discrete activities, and should certainly be scaled to the situation, having a framework in place would be very useful to (1) enable growth, (2) permit introduction of different data sets, and (3) give Boards of Directors, auditors, reviewers and regulators a level of comfort that the company takes data management seriously.

Balancing cost vs value? Alternatives…

Many early stage startups are focused on laying out the important initial groundwork to sustain themselves — developing products, recruiting talent and identifying customers. As they move through funding stages and become established, they might be looking toward aggressive growth, IPO and engaging in discussions to be acquired. This is a sliding scale – and it may not make sense to appoint a full-time CDO initially. Startups should consider engaging a consultant or a CDO on a contract basis to implement and appropriate framework. As time and circumstances evolve, the time commitment can be adjusted.

Who should drive the decision?

The role is so important and strategic, that the CEO should drive the decision to appoint a CDO. The CDO should expect to work closely with the CEO, as well as the rest of the executive team. Moreover, the CDO should expect to meet with the investors and advisory board to reinforce the role and how it will help the company accelerate forward.

Conclusion

It goes without saying that startups leveraging data science are not at odds with managing data, or the scope of a CDO. They are extremely complimentary, to the point where an CDO can dramatically improve the probability of a data program, or data-dependent startup, succeeding.

CDO, CPO, Information Management and Governance, Information protection, Privacy

CDO’s Role in Managing Data Breaches

December 11, 2018 James Howard

In the span of a week, we’ve see data breaches affecting 600 million people. For perspective, that’s more than every man, woman and child in the US, Russia, Canada, Britain and Australia combined. And the damage may not be done, as scammers and other bad actors frequently take advantage of the widespread confusion that follows these sorts of incidents.

Moreover, as the investigations unfold, we will begin to see the breadth and depth of what went wrong, who did what, and what steps must be taken to prevent this from happening in the future.

The risk manager in me says this will happen again, just as it’s happened before. Data experts know all too well the challenges in implementing controls proportional risk, and counter-balancing every data initiative with the right set of controls — starting with asking whether the proposed data collection or use benefits are worth the downside risk.

So what does this mean to a Chief Data Officer? In a word, everything. Why? Because data is at the center of every breach, and the CDO should be looking at the full picture around both data use and data risk. The emerging role of the CDO in business positions them as a key executive in helping to reduce the risk of breach as well as to navigate the aftermath, protecting the organization’s brand.

Before a Data Incident

In the normal course of business, the CDO should be executing against the company’s data strategy and vision, and maintaining an inventory of critical data assets. The inventory should include key meta-data — ownership, obligations, location, permissions, value, uses, etc — which forms an important part of a periodic risk analysis.

The risk analysis considers threats, vulnerabilities, obligations and relative value of the data to conclude on appropriate protections. The more progressive CDO’s will construct a holistic threat analysis that answers the question, “what could go wrong?” or “how might information be breached?” taking into account behavior of personnel, company culture, key business activities and positioning of the company in the marketplace. Typically, such an analysis covers the spectrum from the seemingly mundane (accidents caused by carelessness or poor judgment), all the way to industrial espionage targeting company data, with a total of 5 or 6 categories in between. This analysis serves as a sounding board to validate the range of control activities, which includes everything from policy, to business practices, to training, to technical controls, and some instances where certain risks have to be accepted, insured against, or perhaps transferred elsewhere.

The CDO should provide business requirements to the CIO and CISO for appropriate technical measures to provide protections, which – depending on the sophistication of the company – could range from providing data classifications, to which the CISO or CIO react, all the way to explicit requirements for, say, encryption and access control.

The inventory shines a light on whether all data on hand is truly necessary, or whether some can be disposed of. Moreover, the CDO’s analysis of business processes using data can also question whether all data being collected is necessary.

The Board of Directors, senior executive leadership and internal audit should – to appropriate degrees – be aware of how the company is using data as well as the CDO’s assessment of risk and mitigating controls. This will allow them to understand the risk/benefit around data use, and weigh in whether the business opportunities related to data use are sufficiently compelling.

The CDO maintains relationships with counsel to understand the legal aspect of obligations, and obtain sign-off on the sufficiency of the compliance programs. The CDO should understand their regulators’ expectations and requirements around handling data, making sure their protection controls meet regulator expectations. These steps are key, because most breaches — especially where regulated data is involved — will result in legal or regulatory exposure, and having transparency with counsel and regulators with streamline investigations.

The CDO should own (or be a key stakeholder in) the data incident management process. This is the process whereby data incidents — data loss, possible breaches or exposures — are logged, analyzed and investigated.

During a Data Incident

Sometimes, a target organization is aware of a data incident as it’s occurring. Many companies have processes to respond in this event, which may focus on containment, interruption, or other priorities (allowing an attack to proceed in a controlled way may help law enforcement with their investigation).

The CDO should be available to help answer questions about the nature and location of data that may be accessed, as well as to begin preparing post-incident planning. Some data owners (e.g., Federal Government) have explicitly defined time frames to report data incidents, the CDO can get ahead of these requirements.

Following a Data Incident

Companies should have a crisis management plan that includes defined procedures to be followed in the event of a cyber attack, data breach or exposure. The details of these plans are tailored to each company, and generally emphasize damage control and protecting the brand — which in itself may follow one or more tracks, based on the nature of the incident.

Stakeholders include senior leadership, legal counsel (sometimes supported by outside counsel), the head of security, the CIO and CISO, and often on-call cyber security consultants. The overall objective is to understand what happened, how it happened, who perpetrated the event, what data was affected, overall impact, and how to repair the damage and prevent the same thing from happening again.

Along these lines, the CDO should help assess the impact of the loss, in terms to cost to the company — defined as asset value, or competitive impact, or brand damage to the organization. The CDO can be a resource to analyze the nature of the data to determine whether external notifications are required, and – in conjunction with counsel – whether there is a regulatory impact. Who owned the data? Do regulators, customers, vendors, partners or clients need to be notified? Is there a timeframe requirement for notification and is there a specific process to be followed? Do affected parties need to be offered – or are they likely to demand – compensation?

The CDO can help analyze what went wrong, by having an understanding of the processes and policy around data use. Was there misuse of data or was it stored, processed or transmitted in ways it shouldn’t be? Was there a control failure, or absence of control?

This analysis concludes with a reassessment and remediation of processes and controls.

Conclusion

Most corporate leaders recognize the near-inevitability of a breach or hack. This is due to a variety of factors, including the increased complexity of information systems, coupled with the expansion of data-rich cognitive and robotics initiatives, many of which rely heavily on data. Data sets themselves are growing at a dramatic pace.

Companies are appointing CDO’s to try and coordinate the activities around the leverage of data, and increasingly, they are assigned responsibility for assessing and managing risk around data. This is not a bad thing at all, since it helps keep risk management activities proportional to risk and the nature of the data.

CDO’s should approach the challenge with a plan, emphasizing transparency and engaging appropriate stakeholders. Whereas today, Boards often look to the CIO and CISO to understand how data handled and protected, going forward they will increasingly look to the CDO.

CDO, CPO, GDPR, IAPP, Information Management and Governance, Information protection, Privacy

Data Regulation is the New Reality

October 27, 2018 James Howard

On October 28th, the BBC’s Chris Baraniuk reported that recently, Tim Cook was in Brussels to address the International Conference of Data Protection and Privacy Commissioners. In his remarks, Mr. Cook, referring to the misuse of “deeply personal” data, said data was being “weaponized against us with military efficiency”. The BBC went on to report that Mr. Cook said “We shouldn’t sugar-coat the consequences,” and “This is surveillance.”

The speech reaffirmed Apple’s strong defense of user privacy rights, in contrast to competitors business model of driving advertising revenue by analyzing people online habits. “The trade in personal data served only to enrich the companies that collect it, he added.”

Mr Cook also praised the EU’s new data protection regulation, the General Data Protection Regulation (GDPR), and went on to say that other countries “including my own,” should follow the EU’s lead toward protecting personal data.

To be sure, economics are at the heart of the concern. Given the string of events that have occured, where data is mishandled or exposed, companies are at risk of losing customer and stakeholder trust, and without that trust, it not clear how they can drive or thrive in the data economy. So coming together in support of a GDPR-like framework makes sense; it raises the conversation to a global level, and can result in a safer and more efficient environment in which to conduct business. Companies that embrace the framework will have more flexibility and resilience, while those firms paying it lip-service will eventually themselves be at the center of their own data crisis.

And therein lies the rub. Compliance is not the same as data protection, especially when the regulation is principles-based and not prescriptive. If the objective in implementing a framework is to comply with a regulation, one is tempted to overlay one’s current operating model with the requirements of the regulation and address gaps. While it may reduce the risk of data incident, it will probably do so by coincidence.

On the other hand, if companies went about handling information with the strongest possible ethics, where they routinely assessed and addressed risk, recognized and avoided moral hazards, then the incidence of breach and miss-use would naturally be much lower.

The obvious competitive issue is that the second scenario is more expensive and less flexible. Moreover, if a minority of companies took this approach, they would be less prosperous, and economic darwinism would cause them to go extinct. And suppose there were a major data “catastrophe”, and the market environment were made up of a combination of those that embrace a high degree of data ethics and those that don’t, the market may not recognize and reward the higher resilience of the highly-ethical-but-less-profitable. Instead, what we’ve seen is the mainstream market reacts with shock and incredulity and – at the prompting of regulators – implement newly-penned frameworks meant to avoid future occurrences of those events.

While one might argue that black swan events are by definition unforeseeable, one can equally argue that waiting for them to strike before implementing any sort of protection strategy simply opens the door to more black swans, and when events do occur, they result in unnecessarily high impact.

Apple’s Tim Cook makes clear his view that status quo is unacceptable. As an unquestioned highly credentialed leader and insider in the technology (and information) world, his use of words like “weaponized” and “this is surveillance” should not be taken lightly — he knows what he’s talking about. No doubt more so than the rest of us.

So as with most things, a thoughtful balance must be considered. The dilemma is how to balance among the following:

The rapid growth the volume to data aggregated by companies, across the board from business-to-consumers, to business-to-business companies, and ranging from companies providing services to those providing goods — and the increasing overlap.
As a subset of that, the increase in the volume of personal data stored online, and the ability to gather even more data about individuals – habits, interests, locations, views and opinions.
The rapid evolution in the science of data analytics, and the ramp-up of technology able to manipulate and compute data on a mammoth scale.
Coupled with this, is the increasing ability to combine and analyze datasets in ways that allow for the creation of new and credible data and conclusions.
As the size and richness of the datasets grow, so do the consequences of an event (whether a breach, misuse, abuse or exposure). These range from a sense of creepiness when personal data is exposed, all the way to the very real consequences of insidious manipulation of our views and opinions.

In short, how can companies derive benefit from data, while managing the risks? Neither momentum is letting up — the momentum around utilizing the expanding datasets, or the momentum around data events and subsequent responses from regulators.

One realistic way is to embrace and build a culture around managing all aspects of data, in lock step. This is built into a data management program, led by a Chief Data Officer, comprised of three interdependent functions:

Data Leverage, focussed on enabling the business use of information,
Data Protection and Compliance, focussed on addressing risk resulting from data leverage, in terms of misuse, loss or non-compliance with obligations
Data Quality, ensuring that the data being used retains its accuracy and integrity

This model is coupled with appropriate oversight, in the form of:

A steering group with senior stakeholders from across the company,
Direct oversight by CEO or COO,
Connectivity into other key functions, including the CIO, CISO, HR and Legal,
Active oversight by the Board of Directors, to support business initiatives and agree with risk mitigations plans.

A standing filter for any and all data initiatives needs to be ethics, and a consideration for the consequences of the genie getting out of the lamp. Is the company willing to handle the outcome, if an initiative goes wrong? What is the risk, how is it managed, and are the right people accepting the residual risk?

The discussion is reaching a fever pitch with leaders of the most influential technology companies adding their voices to the conversation. Any company wanting to join the data economy should consider doing so with an appropriate data management framework. This will position them to accelerate as new opportunities present themselves, while being able to manage events as they occur and accommodate compliance requirements that arise.