Big banks are big on behavioural risk

Once upon a time, not so very long ago, the existence of an in-house multi-disciplinary team dedicated to addressing behavioural risk was something of a unicorn in financial institutions. Fortunately, times have been changing and many large banks have invested considerable resources into understanding, predicting, and shaping behavioural risk and associated (mis)conduct.

Approaches can vary considerably in what is a relatively new area, so sharing of knowledge and experiences amongst peers is particularly useful. It was therefore encouraging to see the heads of behavioural risk teams from six global banks come together for a two-part webinar to do just that.

During the event (sponsored by Thomson Reuters Regulatory Intelligence and the Dutch behavioural science consultancy &samhoud), the heads of the behavioural risk teams from HSBC, Citigroup, ABN AMRO, ING, NatWest and Standard Chartered all discussed the challenges and successes in using behavioural tools, and the way in which regulators are increasingly engaged with adopting behavioural science approaches to compliance.

This really is an area that deserves more attention, discussion, and collaboration.

Our R&G Insights Lab team has been working with financial institutions and clients in other sectors to adapt and enhance their compliance programmes and to make changes at a cultural level in order to bring about greater compliance and effectiveness, including by leveraging behavioural science and data analytics.

We have also been collaborating with Transparency International UK (TI UK) to highlight the way in which such approaches can be effective in the context of anti-bribery and corruption (ABAC) programmes. 

The first output from that collaboration – the TI-UK ‘Make it Count’ report – was concerned with why and how firms should measure the effectiveness of their anti-bribery and corruption (ABAC) programmes by reference to behavioural change and appropriately tailored metrics (as discussed in our post here). The second output will focus on the relationships between values-based ABAC approaches, culture, and behavioural science, and the more familiar rules-based ABAC approaches, and explain how a combination of those approaches can drive real change and mitigate conduct risk (discussed in our post here). The same principles can be applied in compliance contexts apart from (or in addition to) corruption, and we are very keen to spread the knowledge.

The two webinars are available here, and are worth the watch.

R&G Insights Lab is the legal industry’s first-ever offering to focus on analytics and behavioural science. It is a global, integrated, and cross-industry advisory service that combines the dynamic legal team of Ropes & Gray across the globe with world-leading experts in analytics, behavioural science, and strategic consulting.