Trending Video: Behavioral Sciences Approach to Risk Management
Hi, I’m Amanda Raad. I’m a partner in the anti-corruption and international risk practice group and I’m going to talk about the behavioral sciences approach to risk management.
Traditional approach to risk assessments
Traditionally, when we look at risk assessments, we usually go in and look at a bunch of data and pull all of it together and start to analyze it without really looking at what the underlying, driving behaviors are, the root cause behaviors are – and that can only get you so far.
Behavioral sciences approach to risk management
The behavioral sciences approach to risk management really focuses on getting to the root cause of what, and understanding why someone is making the decisions they're making. So, what is encouraging a person to do something or what is preventing a person to do something? If you assume, for example, that a person is engaging in misconduct simply because they don't understand a policy, but really the person is engaging in misconduct for some other reason, maybe there's some outside factor about their compensation or something else that's influencing how they're acting – then simply changing a policy isn't going to change or motivate the behavior that you're trying to change.
Identifying the right individuals to help find solutions
The behavioral approach is really again focused around people, transparent, open discussions, nonjudgmental discussions. The first thing you have to do though is identify the right people to engage with, and data's critical to that. So you want to use data to identify whatever issue or behavior that you're really targeting. If you're targeting, for example, misconduct in one region, you're going to use data to understand which people, which teams that you want to engage with. And then, when you engage with them, instead of an investigative context, you're really going in to work together and to collaborate, and to look at all the different external factors or pressures that might be influencing the situation. And looking at different people that are faced with those challenges and coming up with solutions together, instead of in the risk assessment context where a company's legal or compliance department may take certain findings and data and then go try to find a solution by themselves, the behavioral sciences approach would suggest that the individuals actually on the front lines help come up with a solution that is really fit for purpose.
I think some clients might be waiting to see exactly the perfect way to engage in a behavioral approach to risk management, just because it's a new and different way of thinking. But it's not too soon to take small pieces of the puzzle and to really just be open minded about the fact that the traditional way of approaching compliance, of making sure that policies are up to date, and the training is checked off and the monitoring is done – those are all useful places to start, but ultimately this is a new approach. It's another layer that you can really take to understand why people are doing what they're doing, and to hopefully create a compliance solution and a culture that you're really aiming for.