Ethics in Business Analytics

Companies have more customer data than ever before, which has increased the need for experts who know how to analyze and extract insights from that information.¹ Without a strong grasp of ethics in business analytics, however, data scientists and analysts may unknowingly overstep the guidelines that ensure responsible data use.

If you want to start or advance a career in business analytics, understanding the basic principles of ethical data analytics can help you handle customer information properly. Read on to learn more about data ethics in business analytics.

The following ethical considerations in business analytics help ensure the responsible collection of information and data usage:

This principle states that the information a business collects from a customer belongs to that individual. As a result, obtaining someone’s personal details without their consent is unethical, just as it’s considered stealing to take a physical item without the owner’s approval.² An organization can gather data responsibly by asking consumers for permission before collecting their details.

After organizations gather consumer data, they are ethically required to protect it from public exposure or unauthorized access.² That’s why some businesses have data ethics boards, which define and uphold responsible data practices to keep customer information secure and private.³

Data privacy in business analytics is often a legal obligation. For example, the Health Insurance Portability and Accountability Act (HIPPA) in the United States prevents hospitals from disclosing a patient’s sensitive data without consent.⁴ Additionally, the European Union’s General Data Protection Regulation (GDPR) requires organizations that handle information of European residents to implement measures, such as encryption, that keep customer data safe and confidential.⁵

Complying with data privacy laws helps companies handle customer information ethically and avoid legal penalties.

Because customers own their personal information, they have the right to know how a company collects, stores, and uses it. Firms also need to be transparent about how they protect consumer data from unauthorized exposure and security breaches.²

This level of transparency isn’t just an ethical matter. According to Cisco’s 2022 survey, being transparent is the most essential thing businesses can do to build and grow trust when handling customers' personal data. Because most consumers avoid doing business with companies they don’t trust, this is a good example of how committing to responsible business intelligence can affect an organization's bottom line.⁶

The extensive adoption of business analytics tools and AI-powered algorithms has made analyzing big data more efficient. However, studies have shown that using these digital solutions can sometimes unintentionally cause biases and unfairness in how a business converts raw data into actionable insights, causing discrimination against specific populations.^{7, 8}

For instance, Amazon stopped using a recruitment algorithm, which analyzed resumes to identify the best candidates, after discovering that the technology had developed a bias against female applicants. The AI favored resumes that contained terms used mainly by men.⁸

One way to ensure fairness in business analytics is to use analytics tools with human oversight instead of relying on technology alone. Having a qualified human review AI recommendations provides an extra layer of quality assurance before making a final business decision.⁸

This principle involves organizations being responsible for the data they collect and the outcomes of handling the information. This may mean informing customers if data breaches happen and taking steps to mitigate the incidents.⁹

Equifax, one of the largest credit reporting agencies in the United States, demonstrated accountability during a 2017 data breach that exposed the personal information of 147 million people. The company announced the cyber incident and settled with relevant government bodies to compensate anyone who experienced financial loss due to the attack.¹⁰

Ethical data practices protect businesses from the following consequences:

Ethics in business analytics often align with data security and privacy laws. Breaking these regulations can result in fines that significantly affect business operations.

In 2019, for instance, the U.S. Federal Trade Commission (FTC) imposed a $5 billion fine on Facebook for “deceiving users about their ability to control the privacy of their personal information.”¹¹ This amount might not be the typical fine for violating data laws, but it demonstrates the potential for monetary penalties to devastate a business. A company’s location, the specific law in question, and the nature of the violation influence the amount of financial penalties.¹²

If a company breaks a data privacy law, the government agency in charge of compliance can impose more rules on that organization to encourage responsible data practices in the future. When Facebook broke FTC data rules in 2019, the FTC created additional, more complex compliance requirements for the social media company.¹¹

The more the regulatory requirements, the greater the business's compliance burden. When this happens, it increases costs and reduces a company’s capacity to innovate.¹³

The rise of artificial intelligence has led to ethical issues in business analytics. For instance, the World Health Organization (WHO) warns that using untested AI systems for data analysis could lead to costly errors by healthcare workers. Also, AI analytics tools trained with biased data can generate misleading insights that could pose risks to health and cause discrimination.¹⁴

Additionally, big companies like Apple have restricted employees from using generative AI technologies such as ChatGPT. The concern is that confidential information fed into these tools might be leaked or harvested.¹⁵

With an Online Master of Science in Business Analytics (MSBA) from the Leavey School of Business at Santa Clara University, you gain the knowledge and skills to become a leader in this crucial field. Pursuing an Online MSBA at SCU allows you to learn on your own schedule, so you can study while working and attending to family obligations. Through your coursework, you’ll develop a deep understanding of data analysis, business analytics, and information technology to build the foundation of a dynamic career. You will also have opportunities to connect with the best minds in your field among the faculty and student body.

Contact an admissions outreach advisor today to see how the Leavey School of Business can help you take the next step in your career.