“Behavioral science is fascinating, but how do you apply it to the operational reality?” Last year this question kick-started a series of articles I’ve written on the FCPA Blog on how behavioral science can be effectively applied to ethics and compliance.
Behavioral Risk Management (BRM) is a new emerging paradigm that recognizes human behavior’s critical role in shaping organizational outcomes. It is a powerful approach that harnesses behavioral science insights to enhance risk identification, mitigation, and organizational resilience.
In the articles, we explored the transformative potential of BRM and covered a lot of ground. And I thought – why not combine them in a step-by-step practical guide for E&C professionals?
Today I’m proud to say this Guide is ready, and I invite you to download it to unlock BRM benefits for your organization.
Traditional risk management frameworks often focus on processes, systems, and controls, neglecting the fundamental influence of human behavior. Yet, the decisions, actions, and social dynamics can make or break an organization’s ethical culture. BRM acknowledges this crucial factor, illuminating the relationship between human behavior and risk outcomes.
To implement BRM successfully, organizations need to adopt a holistic approach. Here are some key steps to get you started:
Risk assess behaviors and their underlying drivers. The goal is to identify behavioral patterns and trends and understand the factors contributing to risky behaviors. A simple sequence illustrates the point: drivers lead to behaviors, and these, in turn, lead to outcomes. Although the behavior is the part we see, we need to focus on the drivers that shape it rather than the behavior itself if we want to change it. And here, we must turn to the question of culture – because changing behavior means changing the environment in which the behavior is taking place.
Get granular – zoom in on subcultures. Culture typically forms among groups of people with regular interaction, often with a common manager. The more team members interact, the more they develop shared assumptions, values, and behaviors. The climate can vary significantly in large organizations from one team, location, or even informal social group to another. While some level of homogeneity is expected– based on awareness of the same policies, mission statements, and executive leadership – it is incorrect to assume that culture will be consistent across an organization. That’s why a very targeted approach can be more beneficial than looking at the whole organization with a holistic culture assessment.
Create your company’s behavioral risk map. Looking at subcultures and risk hotspots one by one, you ultimately arrive at a “heat map” of the organization. Such a map can then guide the risk-mitigating efforts: developing training programs, working with social norms, and re-designing business processes.
Start small with behavioral interventions – and be prepared to fail. Human behavior is very complex – many factors influence our decisions. Now think about an average organization: a super-complex nonlinear system, a massive interplay between various group norms, behaviors, and underlying drivers. Because of this complexity, it is advisable to start small changes and carefully monitor their impact. Working with behaviors is an experimental, trial-and-error approach with no point-and-click solutions.
Select the right type of intervention. There are a wide variety of behavioral interventions, so selecting the right one (as opposed to the most popular ones) can be challenging. The key here is to have strong insight into the drivers of the targeted behavior. Some drivers will matter more than others – focusing on these is your optimal path to behavioral change.
Apply behavioral insights to your ABC program. Anti-corruption compliance is arguably one of the most pressing issues for many, if not all, E&C practitioners. Behavioral science helps us make ABC compliance programs more effective, and some helpful pointers include a well-intended sludge, writing scripts for future “hot” emotional states, and “majority norm” messages.
Behavioral science provides valuable tools to understand and influence human behavior in the context of compliance and risk management. To support your journey into the world of BRM, I invite you to download my free 10-Step Guide for more insights, practical tools, and actionable strategies to help you leverage the power of behavioral science in your E&C efforts.
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