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

Wieke Scholten and Alexandra Chesterfield
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Wieke Scholten: Managing Director and Co-Founder, BR Insights, The Netherlands
Alexandra Chesterfield: Head of Behavioural Risk, Group Internal Audit, NatWest Group, UK and PhD Candidate, London School of Economics, UK

Journal of Risk Management in Financial Institutions, 2024, vol. 17, issue 4, 383-394

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.

Keywords: behavioural risk; risk management; audit; behavioural science; culture; ethics; financial services (search for similar items in EconPapers)
JEL-codes: E5 G2 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:aza:rmfi00:y:2024:v:17:i:4:p:383-394

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