Finance, foes and failure: The risks of neglecting data governance

Data governance is a buzzword that we hear thrown around a lot, especially since the implementation of GDPR back in 2018

A big part of data governance – and the part that most people are familiar with – is around compliance. The processes and policies lay out who can take what actions with what information, when, under what circumstances and using what methods. Ultimately, it ensures the responsible use of customers’ personal information and avoids the penalties that come along with failing to do so.

As a result, neglecting data governance can have serious financial consequences. The fines can be heavy – the most expensive handed out to date totalled almost £630 million. With just 12% of UK councils reportedly being compliant with GDPR and 700 data breaches at UK councils being reported to the ICO last year, government funds are being spent on bills that are avoidable.

Yet, fines are just the start of the financial hit a business could face. Data governance will make or break your organisation’s reputation. The impact of the brand degradation that businesses are likely to suffer once their lax approach to data protection is revealed could be significant. No one wants to transact with a business that will not protect their data. In fact, data protection is set to become the next ‘badge of honour’ for businesses. Whilst sustainability, diversity and fair trade have previously been accolades that customers look for when choosing which businesses to interact with, being a data guardian is a growing phenomenon. The reputational impact that a GDPR fine can have on a business is, therefore, huge and can result in significant customer loss. With the growth of competition in many markets, it is easy for customers to find an alternative. Financially, this loss will often amount to more than the fine itself.

Such negligence can also have a negative impact on your supply chain. As with customers, partners, suppliers, and service providers will also choose not to work with organisations who fail to comply with standards such as GDPR. The reputational damage of a company trickles down the supply chain, also inflicting financial harm on your partners. Organisations that neglect data governance are, therefore, likely to lose the loyalty of their supply chain partners and struggle to find others willing to work with them in the future.

Building a strong data governance programme

Avoiding all these disasters can be simple, although many organisations struggle to get started with data governance. In fact, the research that we conducted at the start of this year indicated that nearly 20% of companies had only just begun their governance journey.

The first crucial step is data discovery. A company’s data, including that of its customers, is stored in multiple locations across the business. The majority of organisations, prior to beginning their data governance journey, have no idea where to find most of it, let alone what they could use it for. Correctly identifying and then classifying this data is critical to responsible governance. Once this has been achieved, any gaps or violations will be much clearer and can be addressed.

After that, process creation and documentation can take place, allowing the project to be executed and, ultimately, start to drive impacts. Teams can ensure that their data governance strategy is closely aligned with their core objectives and drive value from the project. This will establish best practice and keep your company on the road to data success.

A small part of what data governance has to offer

At the end of this process, many see the tick in the compliance box and consider it done. Yet, that is just a small part of what data governance has to offer. Our research found that 25% of data governance programs in the UK are failing to add value. This is because too many organisations stop before they reach the end of the rainbow, where the real value can be found.

Through the discovery and classification process, businesses gain an understanding on what data it holds and where it resides. This creates a rigorous data catalogue, which is accurate, transparent, accessible and consistent, improving data quality across the whole organisation.

This will pay off in a number of ways as high data quality increases business efficiency, leading to better performance and an enhanced business reputation. In addition, it creates a trusted dataset that enables smarter decision-making, which can drive tactical business strategies and set organisations on the road to success.

A solid data governance programme will steer you away from the potentially disastrous compliance pitfalls and transform your data into a valuable business asset. Neglecting data governance not only opens you up to public criticism but you can wave goodbye to the mountain of benefits that data governance offers. Taking the time and putting the effort and resources into nurturing your data will pay off in the long run.

 

This piece was written and provided by Michael Queenan, CEO and Co-Founder of Nephos Technologies