Sample Answer

Cost of Ineffective Data Management & Data Governance Solution

1. Example of Cost Incurred by Ineffective Data Management:

Scenario: A large e-commerce retailer suffers a data breach due to poor security practices and inadequate data management. Hackers gain access to sensitive customer information, including credit card details and personal addresses.

Cost:

• Financial:

  • Legal expenses: Investigations, regulatory fines (e.g., GDPR), legal settlements with affected customers.

  • Compensation: Reimbursing customers for fraudulent charges, credit monitoring services.

  • Lost revenue: Damage to brand reputation, customer trust, and potential decline in sales.

  • IT security upgrades: Implementing stronger security measures to prevent future breaches.

• Opportunity Cost:

  • Lost business opportunities: Hesitant customers may choose competitors with stronger data security reputations.

  • Damaged brand image: Negative publicity and public mistrust can hinder future growth and expansion.

2. Data Usage Restriction to Prevent the Cost:

Data Governance Implementation:

• Data Minimization Principle: The retailer implements a policy to collect only the data necessary for its business operations. This reduces the amount of sensitive information stored, minimizing the risk of a breach.

• Strict Access Control: Only authorized employees with specific roles and responsibilities are granted access to customer data. Access levels are carefully defined and monitored.

• Data Encryption: All sensitive customer data, including credit card numbers and personal addresses, is encrypted both in storage and during transmission. This ensures that even if data is accessed by unauthorized individuals, it remains unreadable.

• Regular Security Audits: The retailer conducts regular security audits to identify and address vulnerabilities in its systems and data management practices.