2021 INTRODUCTION | Behavioral Science

“People are social creatures that want to belong to and identify with a group. They look for ‘social cues’ to determine which behaviour is appropriate and which is not,” writes Mirea Raaijmakers, ING’s head of Behavioral Risk Management.('From Policy to Practice') “In recent years it has become increasingly clear that studying behaviour has a predictive quality with regard to future performance. Early intervention can mitigate risks in a more timely way and help to prevent future problems,” she adds. “Where people used to look back more, nowadays, there is more value attached to looking ahead, and people are increasingly aware that the capacity to examine behavioural risk is an important asset in this respect.” 

As discussed in our past year’s reports, behavioral science has been in the ascendant among financial sector regulators and supervisors for the last several years. “A sound organisational culture strengthens alignment of attitudes and behaviours within an organisation to positive corporate values,” argues Ho Hern Shin, Deputy Managing Director in charge of Financial Supervision at the Monetary Authority of Singapore. (Culture and Conduct Supervision —a Journey ) MAS is currently working to develop a framework to assess firms’ organizational culture in a structured and consistent manner. “The framework and supporting methodology will leverage behavioural science and organisational psychology concepts and techniques, accompanied by an intervention framework to guide supervisory actions in addressing cultural risks in a financial institution,” she adds.