Yahoo experienced the largest data breach in history in the years 2013 and 2014. Three billion accounts’ information were leaked, making it one of the largest consumer data leaks in history. Personal information, including emails, names, dates of birth, and telephone numbers, were put at risk. The reason this happened was because Yahoo didn’t properly manage the data they collected. They only hired their first data officer, Usama Fayyad, after the fact. Modern businesses need to learn from Yahoo’s mistakes. If your company doesn’t have a Chief Data Officer or a similar senior data expert, you’re being irresponsible and reckless with the personal information of your customers.
Role of a CDO
It’s surprising that American businesses aren’t being more careful with their customers’ information. Data breaches are not a new or unique problem—they are one of the numerous challenges that businesses face each year. These breaches have been happening for years across multiple industries, including food service, healthcare, and telecommunications. Yet, companies keep making the same mistakes.
Not enough businesses are acting like this is a problem. One out of every three companies currently do not have a CDO. Of the CDOs currently employed, their role can be vague or limited in scope. Ideally, the CDO would oversee data collection and storage and how data is integrated into the company’s strategies and products. In reality, many CDOs find themselves in turf wars with IT departments and Chief Technology Officers. Protecting, collecting, and managing millions, billions, or even trillions of data points with limited staff and financial resources is a substantial challenge. CDO’s need to be able to tackle these challenges head-on.
Negative Consequences of a Data Breach on a Business
The average consumer doesn’t make things any easier. Most people rarely take the necessary precautions to protect their data or understand what they are agreeing to when they sign a user agreement. But, regardless of who’s to blame, American consumers take their business elsewhere when a company suffers a data breach; more than 40% of consumers don’t forgive companies for data breaches. That loss of public trust is a risk to any company, regardless of size. When you hurt your consumers, they will seek out competitors with better track records.
No company, regardless of their size or name recognition, is exempt from those consequences. In one of the most well-known breaches in modern history, the credit reporting agency Equifax became synonymous with consumer distrust. According to a report from the House Committee on Oversight and Reform, they were overly aggressive in how they accumulated data and housed it on a variety of outdated IT systems. Their CDO didn’t control how data was stored or protected, only how data influenced and informed business decisions.
Limiting the CDO to business strategy was a mistake. If the role had included how data was managed, stored, collected, and protected, one of the worst data breaches in history could have been avoided. Millions of customers’ personal data and the company’s reputation would be safe and secure.
Benefits of Having a CDO
Hiring a CDO is clearly in the best interests of every company that works with data—which is basically everyone in the 21st century. And there’s no cost argument against them. A CDO’s salary pays for itself. They (or any equivalent data-focused role) keep data organized and well-maintained, improving security and oversight and reducing the chance of a data breach. Those precautions mitigate the risk of costly PR and legal issues—the average data breach costs $3 million (a figure that can grow to $100 million in settlements or fines).
But the benefits of a CDO go beyond security and damage control. They can update and improve your products and how your business operates. If you have any data on your users or how your product is consumed, a CDO can take those data points and turn them into actionable improvements that engage your customers. Look at Netflix as a model. Their platform builds a user profile for you, based on your interests, designed to keep you invested by showing you programming you’ll like. When everyone is constantly discovering new content tailored to their interests, it keeps them hooked on the subscription. Companies that consistently learn from the data they have and adapt to better serve their customers’ preferences are becoming increasingly common.
You need a well-trained data professional at the executive level of your company if you don’t already have one. You can’t predict every issue your company will face, but if you work with data, you can predict these types of problems and take steps to prevent them. Do the right thing and bring a CDO onto your team. And, when you do hire them, clearly define their role. Empower them to challenge the way your business has been doing things and elevate your data management. Then, provide them with the resources to make their vision a reality. The peace of mind and security those simple steps will bring you is more than worth it. Responsibly run companies, in an age where consumers are increasingly conscious of companies’ choices and histories, are the ones best positioned to succeed.
