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The Role of Ethics in Business Analytics

01 Aug
Developing AI codes of ethics. Business policies and responsibility for guarding against unintended bias.

The recent boom in artificial intelligence (AI) has led to ethical concerns about how businesses collect, store, and analyze data. For example, prominent companies like Apple and Verizon have banned employees from using the AI-powered ChatGPT out of fear that the chatbot could gather and leak confidential client data.1 Similarly, the World Health Organization warned that AI tools that are trained with biased data could provide health care workers and patients with factually incorrect health information.2

Data ethics help ensure that organizations gather and interpret information accurately and fairly. But making ethical decisions isn’t always straightforward with business analytics. Analysts must balance the needs of their organizations with many concerns, including data security and bias detection. This article explores the role of ethics in business analytics and the social impact of ethical data usage.

What Are Data Ethics in Business Analytics?

Business analytics utilize statistical methods and digital tools to transform vast amounts of information into valuable insights. Organizations use these findings to make strategic decisions and better understand consumer behaviors.3

Business analytics have many practical applications in the corporate world and beyond. For instance, analysts can examine historical sales trends to identify the most effective marketing strategies. Predictive analytics also allow companies to forecast how consumers might respond to a new product or a price increase.3

Data ethics in business analytics refer to the moral principles, laws and practices that help ensure companies use data legally and responsibly. Defining traits of ethical business analytics include:4

  • Customer information stays private and secure
  • All data usage directly benefits clients, not just the company
  • Consumers understand how and why their data is used
  • The use of data aligns with the company’s mission and core values

Ethical data usage has many advantages, like upholding a company’s reputation and ensuring compliance with federal regulations. Data ethics also protect consumer information from fraud, identity theft and other cybercrimes.5

Ethical Principles in Business Analytics

Data ethics are a broad concept encompassing numerous practices and standards. Here are a few key ethical principles for business analytics.

Responsible Data Collection

Businesses need to harvest and interpret enormous amounts of data to detect trends and make accurate predictions. However, the United States hasn’t passed comprehensive federal privacy laws regulating how companies collect and sell consumer data. As a result, many people don’t realize that their personal information has been tracked and used for commercial purposes.6

Companies can collect data responsibly by:7

  • Asking consumers for informed consent before gathering information
  • Explaining the data’s intended use to clients and stakeholders
  • Harvesting only as much data as necessary to improve the customer experience
  • Periodically auditing their data collection practices to ensure that they’re ethical

Data Privacy

Once businesses collect data, they’re ethically — and, in many cases, legally — obligated to keep this information confidential. Some companies have established data ethics boards that include a chief privacy officer. These boards can implement company-wide policies to protect data.4

Additionally, there’s a patchwork of laws governing data privacy in the U.S. For example, the Health Insurance Portability and Accountability Act (HIPAA) prevents health care organizations from disclosing confidential patient information without consent.8 Likewise, the Fair Credit Reporting Act limits the information that can be collected and shared by consumer reporting agencies.9

Data Security

Data security is a fundamental aspect of data ethics in business analytics. These practices help protect information from data leaks and other risks:10

  • Implement end-to-end encryption so that only authorized users can access data
  • Anonymize data whenever possible
  • Only hire vendors that prioritize data security and don’t allow them to store confidential data on their servers
  • Use secure cloud workspaces to share documents

Some industries must also follow stricter data security laws. The Federal Trade Commission’s Standards for Safeguarding, for example, regulate data usage for financial institutions like banks and credit unions. These organizations must implement comprehensive information security programs to keep consumer data safe and private.11

Accountability and Transparency

Companies can build brand loyalty and increase trust by being transparent about their data usage. Businesses can utilize data responsibly by disclosing how they use it to understand and meet consumers’ needs. Additionally, ethical companies inform consumers about the purpose of their data usage and allow those consumers to refuse to share their information.12

Accountability is another essential part of data ethics. Companies behave ethically by informing consumers if data leaks occur and taking steps to fix the situation. For example, in 2022, eBay immediately instructed customers to change their passwords after discovering that hackers had accessed 145 million customer records.13 eBay also hired a forensics investigator to find out how the breach occurred.13

Algorithmic Fairness and Bias Detection

Researchers have discovered that AI algorithms and other data analytics tools can unintentionally perpetuate biases. One study reported that algorithms used to calculate mortgage credit risk consistently charged higher interest rates for Black and Hispanic borrowers.14

Companies can take steps to ensure fairness and reduce bias in the algorithms they use for business analytics, such as:15

  • Using open-source software to make algorithms more democratic
  • Hiring data scientists to detect and eliminate bias
  • Collaborating with other companies to develop ethical business analytics tools

Social Impact of Data Ethics

Business analysts can use data ethics to drive social change and protect vulnerable communities. For instance, the software company Tableau founded the Data Equity Hub to help nonprofit organizations combat inequities with data analytics. This foundation uses data to advocate for social issues like racial justice.16 Meanwhile, MedAware uses AI-enabled business analytics to prevent prescription errors, saving lives.17

Make an Impact With an Online MSBA

Business analytics are rapidly evolving as exciting new technologies emerge. You can start or advance your career in this field with the Online MS in Business Analytics from William & Mary. This degree will give you a competitive advantage by teaching you how to convert data into actionable insights that transform organizations.

Under the guidance of top faculty members, you’ll study cutting-edge topics like AI applications for business, machine learning and prescriptive analytics. Plus, you’ll develop essential technical skills, such as building data warehouses and coding with Python and R.

Connect with an admissions outreach advisor to learn more about how the Online MSBA can elevate your career. Schedule a call.

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