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ChoicePoint Problem Definition Authors Dionne Hill Sungkuk Ji Scott Schomaker

ChoicePoint Problem Definition Authors Dionne Hill Sungkuk Ji Scott Schomaker. Contents. Framework History Business Vulnerabilities Government Regulation Next Steps. A Framework for understanding ChoicePoint’s challenge.

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ChoicePoint Problem Definition Authors Dionne Hill Sungkuk Ji Scott Schomaker

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  1. ChoicePoint Problem Definition Authors Dionne Hill Sungkuk Ji Scott Schomaker

  2. Contents • Framework • History • Business Vulnerabilities • Government Regulation • Next Steps

  3. A Framework for understanding ChoicePoint’s challenge. ChoicePoint’s success in monetizing data is also increasing the impact of those data. As the negative impacts increase, a regulatory response hurting the business becomes more likely. Value Data Errors Misuse Privacy Concerns Impact Regulatory Response

  4. Service grows over time • 3.7K employees, 5K customers • Adds 6B new public records to database, 13B total • Adds data sharing among databases and electronic maps • $117M in federal contracts, enforcement 5% of revenues, 100K customers • 19B public records held • 1997, ChoicePoint serves insurance clients • 2000, merges with DBT Online • 2004, acquisitions provided new technologies • 2004, provides information to 7K federal state and local law-enforcement • 2005

  5. The ChoicePoint Business Vulnerabilities Errors Misuse CHOICEPOINT Maintain records Consolidate Databases Expand service lines DATA IN Collecting Business data Purchasing Databases Recording Public Acquiring competitors DATA OUT Credit Checks Background Checks Direct mail lists Privacy Concerns

  6. Costly regulatory environment Additional regulation causes value decrease and threatens current model; ultimately affecting ChoicePoint’s bottom-line and ability to provide information to clients. Future State Current State • Breach leads to additional regulations and lawsuits • Social Security restrictions, cost $15M-$20M in revenues • Restrictions and bans like those in Europe and Mexico • Other costs implications unknown • US Constitution, no “right to privacy” • Patchwork of federal, state, and local laws • FCRA passed in response to widespread criticism • ChoicePoint 550K in FCRA violations in 2003

  7. Next Steps • Analyze and prioritize potential regulatory change impacts • Engage with Executive team over details of the problem definitions

  8. Follow-up Questions • What are the other cost implications of changes to the business model or government regulations? • Are the endnotes available? • Do ChoicePoint contractors only collect information? How many does the company employ? • Are misuse, privacy concerns, and operational errors all weighted equally? • What is the current shareholder sentiment?

  9. Revenue Mix and Share of income

  10. ChoicePoint Growth ‘00 – ‘04 CAGR = 16.4% CAGR = 30.3%

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