67% of consumers today say they don’t understand how companies use their personal data, and 73% feel they have little influence over how it is used. This is starting to cause a backlash against the shadowy practices of data collection, where consumers are voting with their wallets and choosing to favor companies that promise more privacy.
In this world, transparency and proactive data privacy measures have started to become a competitive advantage for some companies that extend their policies beyond basic compliance. These companies have found that building robust privacy protections can not only reduce risk but also enhance customer trust, strengthen brand reputation and drive business growth. Simply put, data privacy is becoming more than simply complying with regulations; it’s turning into something that can be a pivotal component of strategic business growth.
The regulatory landscape as catalyst for change
The advent of data privacy regulations has had a significant impact on how businesses handle the data entrusted to them by consumers. The General Data Protection Regulation (GDPR) set a high standard for data privacy when implemented by the EU in 2018, influencing other regulations worldwide. The California Consumer Privacy Act (CCPA) and its successor, the California Privacy Rights Act (CPRA), further pushed businesses to adopt strict data privacy measures. This trend is reflected in a growing number of privacy laws worldwide such as Brazil’s LGPD, Canada’s PIPEDA, and China’s PIPL among others.
While some companies considered the new regulations as a burden to meet at the minimum level, others recognized them as a catalyst to differentiate themselves from their competition through a more comprehensive approach to compliance. While these regulations forced a baseline level of investment that wouldn’t add anything to the bottom line, some companies realized that any small percentage increase in compliance spending over this could turn the project into a strategic business initiative.
These businesses have found that implementing proactive privacy measures helps build trust and transparency with customers around how data is collected, managed, stored. For example, an e-commerce company might implement a “privacy by design” approach. Instead of merely complying with regulations—checking the box—the company integrates privacy measures into every stage of its product development. It only collects the data that is necessary, ensures robust encryption for the data it does store and provides clear, accessible privacy policies to the customers whose data is captured.
This proactive approach not only safeguards customer data but also builds a strong foundation of trust. As a result, the company could see benefits including increases in customer loyalty and a reduction in churn rates – demonstrating that proactive privacy measures can directly contribute to business success.
The cost of privacy missteps
Just as proactively approaching data privacy can reap benefits for companies, privacy failures can have far-reaching consequences—ones that extend far beyond regulatory fines, including the erosion of customer trust and profound reputational damage. Over the past several years, a number of high-profile data breaches in banking, healthcare, retail and other data-heavy industries have led to serious repercussions, not the least of which are hits to the bottom line. According to IBM, in 2024, the average data breach costs an organization roughly $4.88 million.
So, what is an organization to do? There are several strategies that can help organizations gain better visibility and control over their data, reducing the risk of breaches and enhancing overall data governance.
- Identify Hidden Risks: AI-powered tools can automatically identify, locate and classify sensitive data, even if it’s buried in email threads or embedded in a PDF. These tools leverage advanced algorithms to scan through vast amounts of data, ensuring that no sensitive information goes unnoticed. By identifying hidden risks, organizations can take proactive measures to secure their data and prevent potential breaches.
- Streamline Compliance: Automated workflows that can adapt to changing regulations can aid in simplifying processes like data retention, deletion and reporting. These workflows ensure that data management practices are consistently aligned with the latest regulatory requirements, reducing the risk of non-compliance. By streamlining compliance, organizations can save time and resources while maintaining a robust data governance framework.
- Protect Modern Workflows: Governance today isn’t limited to traditional data sources; information shared in tools like Slack, Zoom and Teams also is subject to regulatory compliance. Implementing governance policies for these modern communication platforms ensures that all data, regardless of its source, is managed and protected according to regulatory standards. This approach helps organizations maintain comprehensive data security and compliance across all their digital interactions.
- Dark Data Assessment: Regular assessments can reveal risks associated with unstructured, unused or forgotten information and identify areas where compliance can be strengthened. This so-called “dark data,” which includes data that organizations collect, process and store but do not use or need, can pose significant risks if not properly managed. By conducting regular dark data assessments, organizations can uncover hidden vulnerabilities, optimize data storage and enhance their overall data governance strategy.
It’s clear that leading companies are turning privacy into a core part of their value proposition. By building customer trust through transparency and ethical data practices, these companies are setting themselves apart from the competition. Effective data governance isn’t just about checking regulatory boxes. It’s about creating a culture of responsibility and trust. With the right tools, organizations can identify hidden risks, streamline compliance, and protect modern workflows. By demonstrating a proactive approach to privacy, companies show employees and customers that their data is in good hands.
