What is the relationship between data analytics and compliance?
In today’s data-driven world, data analytics has become an essential tool for fuelling innovation and growth. But how does this increasingly data-centric business landscape reconcile itself with compliance? As data analytics continues to operate as a driving force behind improved business strategy and smarter decision-making, the consideration of compliance is only going to become more vital.
In fact, it is estimated that by the end of this year, 75% of the world’s personal data will fall under some form of privacy regulation. Therefore, it has never been more important to understand the relationship between compliance and data analytics, making sure that businesses looking to utilise data to improve their processes and outcomes do so with strict adherence to the law.
So, what is the relationship between compliance and data analytics and how will the interaction between the two influence the businesses of the future?
The importance of compliance and data analytics
The concern regarding data and its usage has never been so significant. Increasing cybercrime, issues of data privacy and a lack of transparency around data usage have only bolstered the ever-increasing scrutiny over how businesses handle and use data as the digital world moves toward tougher regulation.
Earlier this year, the European Commission proposed stronger international enforcement of the General Data Protection Regulation by Data Protection Authorities. Businesses must follow the correct procedures with their data, not only to avoid significant fines or even criminal investigations but also to protect their reputation and maintain the trust of their customers and stakeholders.
With these considerations in mind, it is of crucial importance that compliance is considered at every stage of the data life cycle. Enterprises that want to set themselves apart will need to follow the best practices in data compliance, or else. This includes investing in strong data governance that adheres to both internal policy and external regulation as well as having a ‘privacy by design’ approach to data analytics, where privacy is integrated throughout from the first step of the journey rather than existing as a mere afterthought for data analysts.
Improving Compliance through data analytics
Many businesses now recognise the importance of data analytics in ensuring compliance across their organisation. Using data effectively plays a key role in ensuring that a business is fully compliant in a variety of ways.
- Monitoring and reporting
Strong data analytics helps businesses monitor their operations and generate informed reports to ensure that compliance is being strictly followed. In cases where businesses need to demonstrate to regulators that their processes are in line with the law, comprehensive data analytics provides clear evidence of how businesses are doing. This includes, but is not restricted to, following correct financial protocol, data security, and environmental policy.
- Risk detection and management
Advanced data analytic techniques can help businesses identify potential compliance risks before they become a problem. For example, patterns in data reveal potentially fraudulent activities and predictive analytics can anticipate areas where compliance could become an issue in the future. Data analytics can also make audits much more efficient and effective. Auditors can use data analytics to quickly check large volumes of data for compliance and to identify areas where their attention is most required.
- Improving processes
By analysing compliance-related data, businesses can identify areas where general optimisation and additional training of staff might be required. This can help to continually improve compliance efforts and reduce the risk of breaches. Data analytics can also help to bolster compliance efforts as businesses review where their resources can be most effectively utilised, leading to strategic allocation into the right compliance programs.
Data-driven compliance as a competitive advantage
Data analytics can also help businesses align their compliance objectives with their overall business goals.
For instance, a company that prides itself on its ethical sourcing of materials might employ the help of the right data analytics consulting services to ensure compliance with these standards throughout its supply chain, reinforcing its brand values and building consumer trust.
It is important to remember that a business’s goal is not just to avoid non-compliance but also to use compliance as a tool to improve its business operations and outcomes.
Through data analytics, compliance can become an integral part of business strategy and decision-making. Not only can this improve the overall business processes but it builds trust with customers, stakeholders, and regulatory bodies, which in turn can elevate a company’s reputation and market position. However, the quality of data is critical to having good compliance.
Our recent digital transformation project with Abu Dhabi demonstrates how data analytics and compliance can operate in unison for a better outcome. We worked with the Abu Dhabi government to create a fully compliant data marketplace that could be easily accessed and shared using blockchain technology. Thus, helping Abu Dhabi gain a competitive edge as a world leader in emerging technology and attracting new business and investment to the country.
Through advancing digital technologies, businesses can effectively manage compliance while also optimising data analytics strategies, with both working together to drive business success and growth.
However, there is no one-size-fits-all solution and therefore working on creating the best approach for a business will depend on a multitude of factors.
At MDRx, our team of data scientists and business strategists are backed by industry-leading lawyers at The Mischon de Reya Group. We embed data governance and compliance into your business from the very beginning of its digital development journey. If you are looking to transform your business with emerging technology and expert data analysis then get in touch here.