14th March 2014
The traditional view of data privacy is negative: it’s a risk and a potential pitfall that a firm can fall in if not handling client information well. But that is not the only way to see it, as a new report from PwC argues.
According to the Big Four firm, data privacy, when handled correctly, can be used as a competitive advantage. For too long, says the report, firms have been viewing the glass as half-empty.
“By considering only what privacy safeguards can prevent - customer loss, brand damage, fines, litigation - they miss out on what the right strategy can enable,” the authors write. “Customer data is one of your most valuable assets. Companies that not only protect that data but empower customers to have a say in its use build trust in their privacy programs - and their business.”
It seems that those two aspects - empowerment and trust - are the key. By showing customers that they have control of the data and how it’s used, firms can gain an edge.
“Privacy can be seen as a differentiator, with organisations calling out companies they see as putting customers first when it comes to privacy,” add the report authors.
Of course, that is not to say that suddenly the risks have disappeared. Far from it; accountants need to be as mindful as ever.
So why does a good data privacy record matter? Firstly, argues PwC, customers demand it, with nearly nine in ten (89 per cent) saying they avoid doing business with companies that they think do not protect their privacy online.
In addition, a single data breach is very costly, adding up to more than $500,000 on average for US companies. Moreover a breach increases customer churn nearly four per cent as firms’ reputations are knocked.
And it seems the negative view of data privacy continues to prevail. According to the report, chief executive officers from around the world expressed growing concern about their ability to protect customer and other sensitive data - 15 per cent more than last year.