Discuss about the Business Ethics and Corporate Social Responsibility.
Nowadays, each and every business has its unique behavioral activities and processes. For this, companies form its own company culture by defining some values and ethics. Business ethical issue is a behavior that can be found in an organization and it has a connection with moral problems. Ethics are typically concerned with the moral judgments of an individual about the right and wrong (Bowie, 2017). Decisions which are taken in an organization may be made by the people, but whoever makes them will be affected by the organizational culture. Corporate social responsibility and ethical traits can bring several benefits to the business. At any workplace, business ethics dilemma can lead its people to make wrong decisions because of different complications.
For this discussion, an article from “The Guardian” is selected. This article is named as “Commonwealth Bank (CBA) admits it lost backup data for 20m accounts” which shows the business ethics issue confronted by the largest bank of Australia i.e. Commonwealth Bank of Australia . Currently, this bank has been facing different reputational issues and controversies. The information breaching is the latest scandal that involves the largest lender of Australia. The chosen article shows that Commonwealth Bank admits that it lost the data for 20 million accounts. Recently, the Commonwealth Bank has assured that it has lost the financial statements of approximately 20 million accounts but still it insists that account security of customers has not been compromised (The Guardian, 2018). This essay discusses about the business ethics issue which is confronted by the largest lender in Australia. It includes the major arguments of this ethical issue along with the most suitable ethical decisions. At the end, the essay includes the ethical decision making process assisting this decision by identifying the related ethical philosophies.
In today’s competitive business world, the most important business ethical dilemmas that the businesses confront are the integrity and trust (Yeager, 2015). When customers see that a company is showing a definite commitment to ethical business practices, a higher level of trust and integrity can be built between organization and its clienteles which it desires to cater. For this essay, the selected article is about one of the big four in Australia i.e. Commonwealth Bank of Australia. According to a report, Commonwealth Bank of Australia has acknowledged losing the bank records of more than 20 million people. Account numbers, names, addresses and statements were stored on two magnetic tapes that were meant to be damaged by a subcontractor in the year 2016. Right now, the organization is under investigation following the claims that the organization was not able to secure the data of its accountholders (The Guardian, 2018). Around 20 million customers claimed that their statements having names, account numbers, addresses and transaction details from the year 2000 to 2016 which were saved on two magnetic tapes that were supposed to be damaged by sub-contractor Fuji-Xerox previous year after the discharging from the data center.
By reading the chosen article, it can be analyzed that Commonwealth Bank of Australia is facing the ethical issue related to data leakage and security breach. In the article, the main arguments are that the firm is under the controversy due to security breach and lose of the data of 20 million customers. This is due to the fact that bank is failed to destroy the customer data that was stored on two magnetic tapes. In this case, one of the main arguments is that Bank does not have an ethical structure to save confidential data of its customers. Bank customers are getting the messages on status of their accounts because it moves into the damage control in stir of revelations. In the revert of the allegation, the bank made an argument that information on magnetic tapes has partial data that is used to generate financial statements of customers, of and in itself not totally enough for any fraudulent actions (Curtis, Carre and Jones, 2018). In addition to this, Commonwealth Bank of Australia accepted that it is unable to ensure the destruction of two magnetic tapes comprising past customer statements.
Additionally, it was revealed that the data available on these tapes cannot be used it does not contain the PINs and Passwords of its customers. This article indicates that somewhere this bank is unable to comply with effective legislation for implying with the privacy and security principles. Because of this, Commonwealth Bank of Australia has gone under the enquiry because it has not complied with the Data Protection Laws. Looking at the article, it can be argued that this case is of the scandal of privacy, politics and a primary ingredient of business growth i.e. public trust. This business ethics issue led this bank to facing the issue of costly and embarrassing relations with the public. It has the fear to loss its customers or accountholders. Due to this issue, many of 20 million customers have contacted the bank to deactivate their account (Norman and Janda, 2018). As per Buzzfeed News, that revealed the scandal, Commonwealth Bank of Australia introduced a team charged with mending the missing tapes. It has named this project name i.e. “Project Chesapeake”. Despite of this attractive name, the bank was not able to locate anything (Schlagwein, Thorogood and Willcocks, 2014).
Considering the above arguments, it can be said that Commonwealth Bank of Australia is confronting different business ethics issues which has influenced the perceptions and opinions of accountholders towards bank’s operations. The current issue at Commonwealth Bank of Australia is one of the issues that it has had to eliminate in its existence. For Commonwealth Bank of Australia, the major ethical issue is the breach of customer data security.
This case shows that now the company has admitted the loss of backup data on magnetic tape for over 15 years of customers’ financial statements in the years, influencing around 20 million accounts. The Office of Australian Information Commissioner (OAIC) is now looking for more confirmations from bank that it has understood from this considerable information breach. In this context, CBA states that it had been not able to assure the demolition of two tapes having customer statements (Teulon, 2014). This data breach has sent a fury wave among bank’s customers who need answers. Earlier, the bank has not informed this to its customers. In order to handle the situation, the firm has delivered the notifications to its customers on their account status.
Thus, the bank is failed to manage the security of customers’ confidential information. This ethical issue is related to corporate social responsibility. Under this, CBA has to take more initiatives to store the confidential information of accountholders. This entity is not able to meet the privacy protection requirements under CSR activities. Commonwealth Bank of Australia is unable to fulfill its responsibility towards the information of customers because they used the services of bank by expecting that it will take the proper care and protection of their confidential information (Laube and Böhme, 2016). Because of this breach scandal, Australian people have felt that CBA has broken their trust. They perceived that it is changing from what they hope and what organization has committed to them. This news of information security caps off a bad time for CBA that was knocked by bank regulator APRA for “lack of accountability” and “widespread sense of self-righteousness” which has led the firm to regulatory breaches. As per the report of Deloitte, at least $700,000 in continuous service fees charged to over were 1050 customers allotted to more than 50 financial planners. It is also noted that the bank may have overcharged or undercharged 5,000 customers up to $4.3 million (BBC News, 2018).
It results that customers are dissatisfied with the operations and services of Commonwealth Bank of Australia. Due to this, the firm has lost the trust of public in its services and transactions. People are thinking that it is immoral to leak the personal and confidential information without their permission. Considering the issues and loss of public trust, the bank has made various ethical decisions which can help the organization to develop its reputation among accountholders. As discussed above, Commonwealth Bank of Australia has faced the ethical issue due to lack of proper security and ethical framework. It has failed to demolish the tapes due to strict privacy and security principles (Iphofen, 2016). This is the major reason behind the loss of data of almost 20 million accountholders.
In order to give response to this business ethics issue, this bank wnt under an independent forensic enquiry by KPMG for figuring out what had occurred and communicated the Office of the Australian Information Commissioner (OAIC) and APRA that is a bank regulator. In addition to this, the firm has made the decision not to inform the customers about this massive security breach. The bank claims this as a good decision because head of CBA said that when these types of incidents are communicated to more people, they cause more risks. The company has issued a video in which he said that their organization makes each and every effort to safeguard customers’ confidential information. He stated that their financial data is one of the most significant things to protect (Hartman, DesJardins and MacDonald, 2014). Additionally, the organization has released the list of security and privacy principles so that it can impose more protection to customer’s data. Among these principles, the most considerable principle will be looking to consider if the CBA maintains is accountability.
Moreover, Commonwealth Bank of Australia has placed its services and customer information through strict security test. The top management and workforce of bank also connected with regulators, legislators and other data security experts so that they can safeguard the confidential data of customers like names, addresses, account numbers, contact details, PINs, passwords and transaction details. It ensured that magnetic tapes are successfully destroyed by the concerned department. From the article analysis, it can be noted that Commonwealth Bank of Australia has made the appropriate decisions by announcing new security principles and issuing the video that explains the whole incident and reasons. The head of bank announced that data stored on tapes does not contain PINs and passwords so it cannot be accessed by unauthorized person. In future, the organization decided to comply with Data Security laws which are implied on banking service offerings. It is essential to apply these regulations and safety measures that the bank has used. There are some more companies from real world which have faced the business ethics issues like Commonwealth Bank has confronted. One of the most recent cases is of Facebook that has faced the issue of data theft of 50 million users. To overcome this issue, the organization has introduced some privacy principles and restricted the access of app developers. Similarly, Sony has fined with £250 after the company founded guilty of breaching the Data Protection Act. It failed to use the security software on PlayStation Network. To overcome this issue, Sony has implemented strict safety measures to safeguard itself from data security issues.
Commonwealth Bank of Australia can use this ethical decision making process to make the decisions on the business issue of customers’ data loss (Crane and Matten, 2016). This process includes various stages containing moral philosophy which Commonwealth Bank can use to make decisions on this ethical issue. Ethical decision making process for CBA is stated below:
Recognize the ethical issue
Under the process of ethical decision making, this is first step where Commonwealth Bank has found out the business ethics issue confronted by it. It has been revealed that CBA is facing the problem related to data loss of 20 million accountholders. The firm does not ensure the demolition of magnetic tapes with customer’s data (Garofalakis, Gehrke and Rastogi, 2016).
Gather the related data
Once the issue is identified, the bank has enquired the issue and gathered related data on that. In this enquiry, the organization founded that it has faced the issue because it has failed to destroy the magnetic tapes which contains the data of customers.
Analyze the data
CBA has analyzed the above collected data with the assistance of legislators, regulators and bank regulators so that it can get the primary reason behind this claim. After this analysis, it has been found that company is failed to destroy the data from tapes and it led the organization to face the issue of data leakage and loss of 20 million accounts.
Consider the Alternatives
The bank has discussed this case with the team and other experts. This step will establish some alternatives like strict principles, issuing the video statement and making efforts to regain public trust.
Make a decision
After the evaluation of all the options, CBA will choose the best available alternative and make the right decision under this stage of process. The organization can develop the decision using the moral philosophy of Deontology (Rosas, et al, 2018). Deontology theory is the moral philosophy that shows normative state and judges the morality of a process considering the applied rules and regulations. This more philosophy is defined as an obligation that bind the organization to its duties and responsibilities. As per this moral philosophy, it is a moral accountability of Commonwealth Bank to safeguard the confidential information of its accountholders (Bentham, 2014). It has to comply with the Data Protection laws which are implied on the banking industry in Australia. The head of CBA has decided to adopt more effective security principles to protect financial information of its customers.
Implementation of appropriate decisions
After making the decisions, the firm has applied the most appropriate decision to the process of company. Company has made investment in the corporate social responsibility activities so that it can regain the public trust (Ferrell & Fraedrich, 2015).
Conclusion
Thus, it is hereby concluded that today’s organizations should focus on complying with all the rules and regulations applied on business. This essay analyzes the business ethics essay that is faced by Commonwealth Bank of Australia. The firm has faced the issue of data loss of its customers. It is founded that company is facing different issues as the largest money lender in Australia. It should make more efforts to safeguard the information of its customers. It will support the firm to attain the loyalty and trust of accountholders.
References
BBC News. (2018) Australia’s Commonwealth Bank lost data of 20m accounts, Available from https://www.bbc.com/news/business-43985233. (Accessed on 22 May 2018).
Bentham, J., (2014) Deontology; or, The Science of Morality.: In two volumes. Adegi Graphics LLC.
Bowie, N. E. (2017) Business ethics: A Kantian perspective. UK: Cambridge University Press.
Crane, A. and Matten, D., (2016) Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.
Curtis, S.R., Carre, J.R. and Jones, D.N. (2018) Consumer security behaviors and trust following a data breach. Managerial Auditing Journal.
Ferrell, O. C., & Fraedrich, J. (2015) Business ethics: Ethical decision making & cases. Canada: Nelson Education.
Garofalakis, M., Gehrke, J. and Rastogi, R. (2016) Data Stream Management: Processing High-Speed Data Streams. Springer.
Hartman, L.P., DesJardins, J.R. and MacDonald, C., (2014) Business ethics: Decision making for personal integrity and social responsibility. New York: McGraw-Hill.
Iphofen, R., (2016) Ethical decision making in social research: A practical guide. Springer.
Laube, S. and Böhme, R. (2016) The economics of mandatory security breach reporting to authorities. Journal of Cybersecurity, 2(1), pp.29-41.
Norman, J. and Janda, M. (2018) Commonwealth Bank admits it lost the details of almost 20 million accounts, didn’t tell customers, Available from https://www.abc.net.au/news/2018-05-02/commonwealth-bank-confirms-loss-financial-records-20m-customers/9720928. (Accessed on 22 May 2018).
Rosas, A., Viciana, H., Caviedes, E. and Arciniegas, A. (2018) Hot utilitarianism and cold deontology: Insights from a response patterns approach to sacrificial and real world dilemmas. Social neuroscience, pp.1-11.
Schlagwein, D., Thorogood, A. and Willcocks, L.P. (2014) How Commonwealth Bank of Australia Gained Benefits Using a Standards-Based, Multi-Provider Cloud Model. MIS Quarterly Executive, 13(4).
Teulon, F. (2014) Ethics, moral philosophy and Economics. Financial Economics, pp.28-8.
The Guardian. (2018) Commonwealth Bank admits it lost backup data for 20m accounts, Available from https://www.theguardian.com/australia-news/2018/may/03/commonwealth-bank-admits-it-lost-backup-data-for-20m-accounts. (Accessed on 22 May 2018).
Yeager, A.L., (2015) Ethical decision making. The Journal of the American Dental Association, 146(8), pp.568-569
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