How much is the data worth?

Data is the new oil. Data is the new gold. Data is a company's most valuable resource. Have you stopped reading yet? I wouldn't be surprised at all, because we've been hearing these buzzwords for so long that we treat them like background music. In the last 10 years we've already had the hype for self-service BI, Big Data, the cloud, and now the second hype for AI is heading toward decline.

Does this mean that these trends are worthless? No. The exact opposite is true. When the hype passes, instead of technology marketing people, engineers get to work. Thus, in a few years they turn, for example, the abstract big date into a structured data lakehouse concept. However, one thing doesn't change at all - we say that data is the most important thing, but we don't devote enough time and attention to it.

A world without data

Imagine for a moment that we come to the office of our insurance company on Monday morning and find that all the data our company had disappeared overnight. Without this data, the organization can't operate: we can't issue any policies, it's impossible to process claims or even work the customer service desk. And operational data is only one side of the coin.

The disappearance of analytical data would be less spectacular and might seem less important at first. But this is only a perception. Without analytical data, every modern organization becomes blind and deaf at the same time. Without reports, analysis, the results of statistical algorithms and machine learning, we are moving into a state where we can start making all business decisions based on the toss of a coin or, if one prefers, a multi-walled dice.

The way out

Such a fatalistic scenario, while unlikely, shows us that the data in the life of our organizations is indeed priceless. Priceless. And this is precisely the problem and at the same time the opportunity. If data is priceless, it's hard to estimate its value, so we put off dealing with it. However, if the rules of the game were changed? Anyway, they are already changing. Since the beginning of this year, there have been regulations in China mandating technology companies to show data as an enterprise resource. Also in the West, the first attempts to include the value of data in companies' financial statements are emerging. And this is the right direction.

Note that if we start treating data as part of an enterprise resource in the financial sense, other questions will quickly arise: What is the quality of our data? How much of our data is duplicated? What part of the data can we use and which are useless? What return on investment does our data generate? These are just the first four questions of many that come to mind.

Challenges

Of course, taking into account the data we have in financial reports would require developing appropriate ways of evaluating and valuing it, in order to avoid various types of fraud. On the other hand, this approach seems to be a great, and perhaps the only, motivator for our organizations to not just focus on the effects of reports or machine learning algorithms that can be seen with the naked eye, but to go deeper and start managing data and its quality.

Article published in Insurance Weekly No. 24/2024