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Dear CRO: Behavioural risk management is the new thing for you

Author

Listed:
  • Scholten, Wieke

    (Managing Director and Co-Founder, BR Insights, The Netherlands)

  • Chesterfield, Alexandra

    (Head of Behavioural Risk, Group Internal Audit, NatWest Group, UK and PhD Candidate, London School of Economics, UK)

Abstract

Behavioural risk management (BRM) helps to better prevent risk events that can hurt financial services firms, their customers, shareholders and society. Underpinned by methods and insights from across the behavioural sciences (such as organisational and social psychology, decision making and cognitive science, etc), this forward-looking risk management approach is increasingly encouraged by regulators and invested in by financial institutions globally. This paper provides a practical three-step approach to manage behavioural risk, illustrated with financial services case studies. Future developments are then discussed. The paper closes with common implicit beliefs that may hinder senior risk management professionals initiating BRM in their organisations and a manifesto for action to help get started.

Suggested Citation

  • Scholten, Wieke & Chesterfield, Alexandra, 2024. "Dear CRO: Behavioural risk management is the new thing for you," Journal of Risk Management in Financial Institutions, Henry Stewart Publications, vol. 17(4), pages 383-394, October.
    • Handle: RePEc:aza:rmfi00:y:2024:v:17:i:4:p:383-394
    as

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    More about this item

    Keywords

    behavioural risk; risk management; audit; behavioural science; culture; ethics; financial services;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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