Amanda Raad, co-chair of Ropes & Gray's anti-corruption & international risk practice, discusses the new data-driven behavioral sciences approach to risk management.
Transcript:
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.
Looking ahead
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.
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