INTERVIEW: ING’s behavioural risk team seeks to uncover ‘invisible drivers’ of risky behaviour

New York (Thomson Reuters Regulatory Intelligence) - Many large financial organizations continue to struggle with misconduct and efforts to improve their internal cultures. In a recent interview with Regulatory Intelligence, Mirea Raaijmakers, head of ING’s Behavioural Risk Management (BRM) team, explained how her group attempts to uncover behavioural patterns within the institution that could potentially put the firm at risk. Before joining ING in 2017, Raaijmakers, a trained organizational psychologist, supervised behaviour and culture at the Dutch central bank (DNB) and is a thought leader in this area.

Mirea Raaijmakers, head of ING's Behavioural Risk Management (BRM).

Q: Tell us about the behavioural risk team. When was it formed and what was the motivation to create such a group?

Behavioural Risk Management (BRM) is a new expertise within ING’s global Risk organisation. ING set up its BRM department in 2018, recognising the growing importance of this type of risk across the financial industry. In all workplaces there is a risk that the way people behave could potentially lead to negative business outcomes. This type of risk relates to the way things are done in an organisation and the invisible drivers underlying these behaviours. It is about how decisions are made, how people communicate, whether they are able to take ownership, how group dynamics and beliefs drive behaviour, and how this could lead to high-risk behaviours.

Q: How large of a team is it and who does the group report to? What kind of expertise or experience do the team members have?

Risk at ING is managed according to the three lines of defence model where the first line comprises the business line managers, the second line is the specialist risk and compliance functions and the third line is corporate audit services. ING’s Behavioural Risk Management team is part of the second line of defence. It is set up as an independent department reporting directly to the chief risk officer. The team collaborates closely with the business lines and other departments such as HR and communications.

There are currently 15 people working in the BRM team. The types of skills and experience the team members have are diverse and unlike those normally seen within traditional risk or compliance roles at banks. These range from social scientific disciplines, such as psychology and behavioural science, to finance and understanding the dynamics of complex organisations. They also need to understand social-science methodologies and tools, have good interviewing skills and be able to interact with people at all levels of the organisation, including senior management.

Q: Describe for us how you go about your work? What are the main objectives and how do you carry out those objectives?

Behavioural risk is when behavioural patterns contribute to the root causes of financial and non-financial risks in an organisation. It is the risk that results from the organisation’s usual way of working and the invisible drivers that underlie these behaviours.

Assessing behavioural risk means that we focus on the way people behave in the workplace and what is driving that behaviour. This requires being on site to observe the behaviours in action, as well as interview people, conduct surveys and carry out self-assessments to systematically detect behavioural patterns.

In practice, the team assesses specific parts of the organisation. The aim of such a behavioural risk assessment is to uncover behavioural patterns and not merely detect incidental behaviour. In addition, they focus on the effectiveness of groups and not individuals.

After an assessment we work with the business to initiate interventions to mitigate the risk behaviours. This approach enables leaders in the bank to intervene on underlying causes of problems and initiate behavioural changes to address these.

Q: Was there any internal resistance to forming the group that needed to be overcome? If so, please describe how those challenges were met.

Behavioural risk is not only about investigating incidents but about uncovering structural patterns that might or might lead to financial and non-financial risk. These patterns could lead to undesirable business outcomes or at the least business outcomes that need to be discussed. Introducing a new way to discuss and identify patterns by nature leads to internal debate. People stick to habits and habits are a basis for cultural patterns. Breaking through cultural barriers that have grown over the years is always difficult. But by debate real change can be achieved.

Q: How important is it to have senior management buy-in and support for the work the team is doing?

The team’s role is to orchestrate structural behavioural change across all lines of defence. All change starts at the top. Having the support and trust of senior management is crucial to be able to change behaviour effectively. They need to be open to the outcomes of the behavioural risk assessments and receptive to implementing recommendations. They need to lead by example, be willing to help improve behaviour and coach staff towards the right behaviour.

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This article was produced by Thomson Reuters Regulatory Intelligence - - and initially posted on Jan. 6. Regulatory Intelligence provides a single source for regulatory news, analysis, rules and developments, with global coverage of more than 400 regulators and exchanges. Follow Regulatory Intelligence compliance news on Twitter: @thomsonreuters