Chapter 4 — Advanced risk and ethics
Lesson map
Lesson 04 published. Map, example, EX016.
flowchart TD
N0["Learning outcomes"]
N1["4.1 Risk to whom"]
N2["4.2 Profiling ethics"]
N3["4.3 Conflicts of interest"]
N4["4.4 Ethical reasoning"]
N5["Synthesis"]
N0 --> N1 --> N2 --> N3 --> N4 --> N5
N5 --> EX["Worked example"]
EX --> Q["Exercise EX016"]
Logical drawing
flowchart LR
N0["Learning outcomes"]
N1["4.1 Risk to whom"]
N2["4.2 Profiling ethics"]
N3["4.3 Conflicts of interest"]
N4["4.4 Ethical reasoning"]
N5["Synthesis"]
N0 --> N1 --> N2 --> N3 --> N4 --> N5 --> Q["EX016"]
[Learning outcomes]
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v
[4.1 Risk to whom]
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v
[4.2 Profiling ethics]
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v
[4.3 Conflicts of interest]
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v
[4.4 Ethical reasoning]
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v
[Synthesis]
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v
[Worked example] --> [Exercise EX016]
Learning outcomes
You will (1) assess privacy risk for individuals, not only the company; (2) apply ethical analysis to profiling; (3) handle conflicts of interest.
4.1 Risk to whom
Corporate risk registers measure risk to the company: fines, reputation, costs. Priscila notes that data protection law focuses on risks to people's rights and freedoms. A data breach exposing transaction histories could reveal health purchases, religious donations or gambling, causing harm to customers even if Corvina's losses are small. She adds a separate column to the risk register for harm to individuals, so that decisions consider both perspectives explicitly rather than letting company risk dominate. For the profiling proposal, company risk is moderate but harm to customers is high.
4.2 Profiling ethics
Corvina's marketing team proposes using transaction data to infer life events, such as pregnancy or job loss, to offer financial products. Priscila analyses it with contextual integrity: customers share transaction data to make payments, not to have intimate life events inferred. Solove's taxonomy names this as secondary use and aggregation. She also notes GDPR Article 21's right to object to direct marketing and the transparency duties. She recommends against inferring sensitive events and proposes opt-in offers instead. Opt-in offers respect customer choice.
4.3 Conflicts of interest
The data protection officer reports to the chief operating officer, who is also responsible for marketing revenue. Priscila notes the risk of a conflict, since GDPR Article 38(6) requires that other tasks of the DPO do not result in a conflict of interests. She recommends that the DPO report to the board's risk committee for privacy matters. The executive committee agrees after discussion. Dr. Ward notes that governance structures shape outcomes as much as individual decisions do. The DPO now reports directly to the board's risk committee on privacy matters.
4.4 Ethical reasoning
Priscila writes an ethics note for Corvina: consider harm to individuals, respect contexts in which data were shared, prefer transparency and choice, and avoid inferences that customers would find intrusive. She tests the note on three past decisions and finds that one, a marketing segmentation by spending category, would have been designed differently. She revises it with the marketing team to use coarser categories and opt-in personalisation. For example, a category such as pharmacy spending becomes general retail, so the model no longer hints at health conditions while still allowing useful segmentation for offers.
Worked example
Priscila adds individual harm to the risk register, advises against inferring life events from transactions, moves the DPO's reporting line to avoid a conflict and writes an ethics note applied to past decisions.
Synthetic case. Proposals are synthetic; Solove (2006), Nissenbaum (2004) and GDPR Articles 21 and 38(6) are real.
Errors and limits
Ethics notes need examples to be usable; abstract principles are easily ignored.
Exercises
- EX016 — Two risk views. Why add a column for harm to individuals? Rubric: 3 = law focuses on people's rights, not only company losses;; 2 = mentions people;; 1 = company only;; 0 = none.
- EX017 — Life-event inference. Why advise against inferring life events from transactions? Rubric: 3 = breaks contextual norms and amounts to secondary use;; 2 = mentions intrusion;; 1 = support;; 0 = none.
- EX018 — DPO conflict. What conflict did Priscila identify for the DPO? Rubric: 3 = reporting to an executive responsible for marketing revenue;; 2 = mentions reporting;; 1 = vague;; 0 = none.
- EX019 — Article 38(6). What does GDPR Article 38(6) require? Rubric: 3 = DPO's other tasks must not cause a conflict of interests;; 2 = close;; 1 = wrong;; 0 = none.
- EX020 — Revised segmentation. How was the past segmentation decision revised? Rubric: 3 = coarser categories and opt-in personalisation;; 2 = one;; 1 = vague;; 0 = none.
Synthesis
Chapter 4 broadens risk and ethics. Chapter 5 compares design alternatives.
Continue studying — chapter 04 of 12
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