Protecting Consumer Data in the Age of AI: What IT Leaders Need to Know

The increasing integration of artificial intelligence (AI) and advanced data analytics into business operations has ushered in a new era of technological innovation. Yet, as AI evolves and organisations collect vast amounts of personal data to fuel these systems, concerns about privacy, data security, and ethical use are growing rapidly. According to a recent study by Cohesity, a significant majority of consumers worldwide are concerned about how their personal data is being collected and used, particularly by companies leveraging AI.

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The findings reveal that consumers across the UK, US, and Australia are expressing unprecedented dissatisfaction with the extent of data collection. In the UK, 73% of respondents indicated they felt personal or financial data being collected was excessive, while the figures rose to 81% in the US and 82% in Australia. More alarmingly, over 90% of consumers surveyed stated that they would consider ceasing business with companies that fall victim to cyberattacks.

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These figures paint a clear picture: protecting consumer data is no longer optional; it's a critical business priority. This article investigates the risks that companies face when handling consumer data, the specific sectors most vulnerable to data breaches, and how emerging threats like AI are raising the stakes. We'll also explore what IT leaders can do to bolster data protection measures in response to these growing challenges.

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The Rising Tide of Consumer Concerns: A Trust Crisis in the Making

The concern around data privacy is not unfounded. Data breaches are becoming more frequent and damaging, affecting industries worldwide and exposing millions of consumers to identity theft, financial fraud, and other malicious activities. The rise of AI has added a new layer of complexity, as consumers worry about how much personal data is being collected to train AI models and whether this data is being handled ethically.

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Cohesity's research highlights a widespread dissatisfaction among consumers about how their data is being used. With 73% of UK consumers, 81% of US consumers, and 82% of Australian consumers expressing that data collection practices are excessive, there is a clear message being sent to businesses: consumers are losing trust.

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Additionally, consumers want to see stronger efforts in protecting their data. In the UK, 73% of respondents called for better data protection measures, a figure that rises to 86% in the US and 87% in Australia. These numbers reflect an overwhelming demand for increased diligence and transparency from companies. The potential consequences of inaction are severe: over 90% of respondents stated that they would consider abandoning companies that fall victim to a data breach, indicating a significant business risk tied to cybersecurity failures.

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Companies Most at Risk: Who Is in the Crosshairs?

While all businesses collecting and handling personal data face risks, some industries are particularly vulnerable to data breaches due to the nature of the information they handle or the scale of their operations. The following sectors are especially prone to attacks and require world-class cybersecurity:

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1. Healthcare

Healthcare organisations collect and store vast amounts of sensitive personal and medical information, making them a prime target for cybercriminals. Medical records, insurance details, and personal identifiers are valuable assets on the dark web. The shift to digital health records, telemedicine, and AI-powered diagnostics has only increased the risk, as more data is being stored and processed electronically.

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2. Financial Services

Banks, credit unions, and financial institutions are high on the list for cyberattacks. Financial data, including credit card numbers, social security numbers, and transaction histories, are highly sought after by hackers. With the rise of AI-driven financial tools, there is also an increased concern about how much financial data is being collected and processed, further elevating risks in this sector.

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3. Retail and E-commerce

The retail sector is a frequent target for data breaches, particularly with the shift to e-commerce. Online retailers collect a wealth of personal and financial information, from payment card details to shopping preferences. Additionally, many e-commerce platforms are leveraging AI to predict consumer behaviour and personalise shopping experiences, raising concerns about data privacy.

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4. Technology and Social Media

Technology companies and social media platforms have access to a treasure trove of user data, including browsing histories, communication patterns, and social interactions. As these companies increasingly deploy AI for personalisation, targeted advertising, and content recommendations, they face scrutiny over how much data they collect and how securely it is stored.

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5. Government and Public Services

Government agencies store critical personal data, including tax records, social security information, and healthcare data. These institutions are increasingly utilising AI for citizen services, but the stakes are high: a breach could compromise national security or expose millions of citizens to identity theft.

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The Role of AI: A Double-Edged Sword

Artificial intelligence is transforming industries by enabling companies to analyse vast amounts of data, automate decision-making, and deliver personalised experiences. However, the same technology that enhances business operations also poses significant privacy and security challenges.

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AI systems rely on large datasets for training and operation, often requiring sensitive personal information to function effectively. This data can include anything from financial transactions to health records to browsing habits. The sheer volume of data required for AI systems to learn and improve increases the risk of data breaches, as cybercriminals target these valuable datasets.

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Additionally, AI can be exploited by attackers to carry out sophisticated cyberattacks. AI-powered malware can learn from its environment, adapt to bypass security measures, and launch attacks more effectively than traditional malware. Similarly, AI-driven social engineering attacks can analyse victims' behaviour to create highly personalised phishing attempts, making them harder to detect.

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Another risk lies in data bias and misuse. As businesses integrate AI into their operations, there is a growing concern about how AI models use personal data to make decisions. Biased data or improper handling of information can lead to discriminatory outcomes or unethical use cases, damaging consumer trust and potentially leading to regulatory consequences.

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Addressing the Threats: What IT Leaders Must Do

Given the scale of consumer concerns and the growing risks associated with AI and data collection, IT leaders have a critical role to play in addressing these challenges. Below are key steps IT leaders can take to protect consumer data and build trust in a rapidly evolving digital landscape.

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1. Implement Comprehensive Data Protection Measures

Data protection starts with understanding what data your organisation collects, how it is stored, and who has access to it. IT leaders should implement robust data governance policies that clearly define the lifecycle of data within the organisation, from collection to deletion.

Encryption, both at rest and in transit, is a critical component of any data protection strategy, ensuring that even if data is intercepted, it cannot be easily exploited.

Additionally, regular security audits and vulnerability assessments should be conducted to identify potential weak points in the infrastructure. IT leaders must stay proactive in patching vulnerabilities and deploying the latest security updates to mitigate risks.

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2. Enhance AI Transparency and Accountability

As AI systems become more integrated into business operations, transparency in how data is collected and used is essential. IT leaders should work to ensure that AI models are trained on high-quality, representative data to avoid bias and errors. Furthermore, businesses should be transparent with consumers about how their data is being used, particularly in AI-driven applications.

AI governance frameworks should be established to ensure accountability, with regular monitoring of AI models for fairness and accuracy. If AI is being used to make decisions about consumers, companies must have mechanisms in place to allow consumers to understand and contest those decisions.

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3. Strengthen Cybersecurity Infrastructure

Given the growing threats from AI-driven attacks and the increasing sophistication of cybercriminals, IT leaders must prioritise cybersecurity investments. Advanced threat detection and response systems, powered by AI, can help identify and mitigate potential breaches before they cause significant damage.

Additionally, endpoint security, identity and access management (IAM), and multi-factor authentication (MFA) should be enforced to protect both internal systems and customer data. The principle of least privilege (POLP) should guide access control policies, ensuring that employees and third-party vendors only have access to the data necessary for their roles.

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4. Prioritise Compliance with Data Privacy Regulations

In Australia, data privacy is governed by the Privacy Act 1988, which sets out 13 Australian Privacy Principles (APPs) that regulate the collection, use, and protection of personal information. Businesses with an annual turnover exceeding $3 million must comply with these principles, ensuring they collect only necessary data, disclose it responsibly, and store it securely.

The Notifiable Data Breaches (NDB) scheme, introduced in 2018, requires organisations to notify both the Office of the Australian Information Commissioner (OAIC) and affected individuals of any breach likely to cause serious harm. Failure to comply with the Privacy Act and NDB scheme can result in penalties of up to $2.1 million for serious or repeated infringements. Strict adherence to these regulations is crucial to avoid financial penalties and maintain consumer trust in a digital economy increasingly reliant on data-driven technologies like AI.

IT leaders must ensure that their organisations are in full compliance with these regulations, implementing policies for data access, consent management, and consumer rights.

Compliance is not just about avoiding fines; it's about building trust with consumers. Demonstrating a commitment to data privacy through transparent practices can differentiate a business in a competitive market.

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5. Prepare for Incident Response

Despite best efforts, data breaches can still occur. IT leaders must ensure that their organisations have a comprehensive incident response plan in place, detailing how to detect, respond to, and recover from a breach. This plan should include clear communication protocols to notify affected customers promptly and transparently.

Regular drills and simulations should be conducted to test the incident response plan, ensuring that all teams are prepared to act swiftly in the event of a breach. By demonstrating readiness to handle breaches effectively, companies can mitigate damage to their reputation and retain consumer trust.

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Building a Data-Driven Future with Trust

As the volume of data being collected by businesses continues to grow, consumer concerns about privacy and security will only intensify. IT leaders are at the forefront of addressing these concerns by implementing robust data protection measures, enhancing AI transparency, and strengthening cybersecurity defences.

The findings from Cohesity’s survey make it clear: consumers expect more from the companies they do business with. They want to know that their personal information is being handled with care, that AI systems are being used responsibly, and that businesses are prepared to protect their data from cyber threats.

For businesses that rise to the challenge, there is a significant opportunity to build long-term trust with their customers, differentiate from competitors, and lead the way in creating a data-driven future that prioritises security and ethics.

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