Efforts to deal with corporate malfeasance, employee misconduct, and ethical failings are falling short. Nowhere is this more visible than in the financial sector. More than $400 billion has been paid in fines since the 2008 financial crisis. But one corner of the industry offers hope: It is using behavioral science tools to identify risky behavior early on.
How Banks Are Using Behavioral Science to Prevent Scandals
They’ve set up teams of psychologists, anthropologists, forensics experts, and others.
April 28, 2020
Jorg Greuel/Getty Images
Summary.
Even following reforms passed in the wake of the 2008 financial crisis, large financial institutions continue to be beset by scandals. Several European banks are using an innovative approach to prevent ethical lapses before they spiral out of control. Called “behavioral risk teams,” they can move freely within an organization. The key competencies that all firms can mimic from these teams include: understanding how to use behavioral science and by extension OD; investigating underlying root causes instead of treating surface level symptoms; focusing on principles as opposed to rules to manage behavior, and identifying risky behavior that is tied to subcultures or departments of an organization versus an individual.
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New!
HBR Learning
HBR Learning
Ethics at Work Course
Accelerate your career with Harvard ManageMentor®. HBR Learning’s online leadership training helps you hone your skills with courses like Ethics at Work. Earn badges to share on LinkedIn and your resume. Access more than 40 courses trusted by Fortune 500 companies.
Avoid integrity traps in the workplace.