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Lack of Trust in the Use of Personal Data Threatens to Undermine the Digital EconomyThe Dialogue About Personal Data Is Currently Focused on Privacy Protection and Is Anchored in Fear and Doubt, Undermining the Huge Economic and Social Value It Could Create, Says a New Report by the World Economic Forum and BCG (May 16, 2012)
NEW YORK, NY -- (Marketwire) -- 05/16/12 -- The Internet economy in the G-20 is larger than the GDP of Brazil or Italy and is expected to nearly double to $4.2 trillion by 2016. But this growth could be severely limited without an effective set of "trade rules" to ensure the appropriate flow of personal data. Areas that could be affected include financial services, health care, online retail and marketing, and social media.
Rethinking Personal Data: Strengthening Trust, a new report from the World Economic Forum, produced in collaboration with The Boston Consulting Group, suggests that appropriate use of personal data can create enormous value for governments, organizations, and individuals. It can help achieve new efficiencies in business, tailor and personalize new products, help respond to global challenges, and empower individuals to engage in social, commercial, and political activities more effectively. The recent financial-market interest in companies that have amassed vast quantities of personal data is evidence of the potential value that can be unlocked.
Personal data, however, remains an asset without clear trade rules and, as a result, is at significant risk of not yielding potential value. High-profile security-data breaches are commonplace. Individuals are increasingly concerned about intrusions into their privacy and the possibility of their personal data being used for purposes of which they do not approve. Companies are unclear about what they can and cannot do with personal data and are either standing on the sidelines or forging ahead with an unclear understanding of liabilities and the potential for negative impact on their reputations and brands. Governments are proposing various laws and regulations to protect privacy while also aiming to encourage innovation and growth.
"Appropriate use of personal data can lead to new economic value, as the recent valuations of companies that collect and utilize personal data would suggest. And it can foster significant social value -- benefiting industry, individuals, and governments alike," said John Rose, senior partner at BCG. "But data is an asset that needs to flow to create value -- and that requires trading rules that balance the interests of all stakeholders."
The question is how to establish a clear, robust set of rules that will enable appropriate data flow and fit the speed at which today's hyperconnected world moves. There must be clear rules and accountabilities but also sufficient flexibility to deal with a rapidly moving, complex, and uncertain set of needs and opportunities.
The intention of the report is to structure and foster debate around some of the key issues:
- Who owns personal data?
- How do we protect individual privacy?
- How should rules for usage be formed and what is the role of context in establishing permissions?
- How should organizations that use personal data be held accountable, both for securing data and for adhering to the agreed-upon rules?
- What is the role of regulators given the global flow of personal data?
The report analyzes these challenges and outlines concrete steps that stakeholders can take, focusing on three areas:
- Upgrading Protection and Security. Focus on how to protect privacy and secure personal data against intentional and unintentional security breaches and misuse.
- Agreeing on Rights and Responsibilities for Using Data. Establish consensus on rights, responsibilities, and permissions for use of personal data that recognize the importance of context and the need to balance the interests of multiple stakeholders.
- Driving Accountability and Enforcement. Hold organizations accountable for protecting and securing personal data and using it in accordance with the rights and established permissions for trusted flow.
"The borderless flow of personal data requires individuals, business leaders, and policymakers to all coordinate in innovative ways to unlock long-term value," said Alan Marcus, senior director of IT and telecommunications at the World Economic Forum. "Critical to this will be developing ways to hold organizations accountable for securing data and living within the agreed rules."
The recommendations are based on an extensive set of global discussions by a community of experts and practitioners within the private sector, academia, governments, and multilateral institutions. The research included numerous interviews and interactive sessions to discuss the opportunities for collaborative action. The insights highlighted significant differences in views not only from different stakeholders but from different geographies as well. Identifying a core set of global principles shared by all stakeholders is central to the initiative's aim of creating economic and social value for all.
This report is part of the World Economic Forum's Rethinking Personal Data project. Launched in 2010, the project is a multiyear initiative intended to bring together private companies, public sector representatives, end-user privacy and rights groups, academics, and topic experts to deepen the collective understanding of how a principled, collaborative, and balanced personal-data ecosystem can evolve.
The goal of the report is to help inform the many debates that are occurring in markets around the world -- debates inside companies and regulatory bodies, between regulators and industries, and across geographies. It is not intended to suggest specific legislative solutions in any single market.
A copy of the report can be downloaded at www.bcgperspectives.com. To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or [email protected], or Lucy Jay-Kennedy at the World Economic Forum, +41 795144139 or [email protected].
About The World Economic Forum
The World Economic Forum is an independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas. Incorporated as a foundation in 1971, and headquartered in Geneva, Switzerland, the World Economic Forum is impartial and not-for-profit; it is tied to no political, partisan or national interests.
About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 77 offices in 42 countries. For more information, please visit bcg.com.
Bcgperspectives.com is a new website -- available on PC, mobile phone, and iPad -- that features the latest thinking from BCG experts as well as from CEOs, academics, and other leaders. It covers issues at the top of senior management's agenda. It also provides unprecedented access to BCG's extensive archive of thought leadership stretching back almost 50 years to the days of Bruce Henderson, the firm's founder and one of the architects of modern management consulting. All of our content -- including videos, podcasts, commentaries, and reports -- can be accessed via PC, mobile, iPad, Facebook, Twitter, and LinkedIn.
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