It is increasingly acknowledged that employee behavior is often a root cause of operational risk in the financial industry. But such behavioral risk is less tangible than other types of risk, stemming from an organization's working habits and the invisible factors — such as group dynamics or beliefs — that lie behind those habitual behavioral norms.
Some banks have begun, therefore, to draw on behavioral science in their efforts to better manage such risks, examining things like the mental shortcuts (heuristics), biases, and other potentially problematic thought patterns that drive decision-making and subsequent conduct. For instance, ING has been exploring innovative ways by which to improve its know-your-customer (KYC) processes though the application of behavioral science.
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