Christian Hunt is the founder of Human Risk Limited (www.human-risk.com), a consultancy that specializes in the deployment of Behavioral Science (BeSci) in the fields of Risk, Compliance, Conduct and Culture. He was formerly the Head of Compliance & Operational Risk Control at UBS Asset Management, where he pioneered the use of BeSci. Prior to joining UBS, Christian was Chief Operating Officer of the Prudential Regulation Authority at the Bank of England. He tweets on BeSci matters as @humanriskblog and publishes a bi-weekly BeSci newsletter.
1.You are a risk and compliance professional that is pioneering the use of behavioral science in both fields. Can you tell us a little bit about behavioral science in this context?
Compliance is all about influencing human decision-making. Organisations cannot be compliant of their own accord, it’s the people within them whose behavior determines whether they are or are not compliant. Equally, the largest driver of risk in most organisations is human; people either causing problems in the first place or making them worse by the way they react to them.
Yet the methods that are often deployed to manage these risks, don’t address the way humans actually make decisions. All too often, we try to influence people by designing for the way we want people to behave, rather than the way they actually do.
I came to this realisation when I moved from being a regulator to become a Chief Compliance Officer. Not only did I have to comply with rules and procedures that weren’t exactly user-friendly, but many of them were being introduced in my name! I figured that if I found them difficult and awkward, then what must it be like for people in the business with less insight into the rationale?
Given we were in the business of influencing human decision-making, why not deploy the techniques used by other people who are trying to do the same thing in other contexts? That led me to look at how advertisers, social media companies, transport authorities, and governments seek to influence our behavior. I saw that the techniques they were successfully using could also be applied to Risk & Compliance. Which I then did!
2.How does incorporating behavioral science into your work as a risk and compliance specialist challenge the status quo?
What I’m proposing is a radical re-think of how we manage Risk & Compliance.
Traditional approaches tend to look at the world from the perspective of the organisation, rather than the individual. For example, a new regulation comes along and the Firm deals with it by writing a policy which they require their staff to read. From the organisation’s perspective, job done! But for the employee, it is just another requirement they need to think about. People are overloaded and constantly worrying that they’re doing something wrong. Using Behavioral Science we can create frameworks that actually think about the end-user and help them get things right.
Many controls that organisations have in place look good on paper but are useless in practice. Just because we write something in a policy, doesn’t mean people will remember it or understand it.
Firms are currently spending billions on controls, policies, and frameworks that we know aren’t effective. My approach can save money and deliver much better outcomes.
3. You have recently embarked on your own to help others incorporate behavioral science into their own operations. Can you tell us about that transition and what you hope to accomplish?
I’m on a mission to “Bring Science to Compliance”. When something isn’t working the way we want it to, there’s likely to be a human component. That’s where Behavioral Science can come in as a cost-effective problem-solving tool.
Having deployed it within a Firm, I know it works and can deliver better outcomes. My aim is to spread the Behavioral Science word, and to help people understand how it can be a cost-effective problem-solving tool. Particularly in regulated industries, where people have a misconception that regulators won’t like a new approach; in fact, the opposite tends to be true.
I do a lot of presentations! Once I’ve explained to people why the traditional methods don’t work, I teach them practical techniques that they can use to solve problems. I also do consultancy, working alongside people that are implementing this.
My ultimate aim is to transform the mainly negative perception of Risk and Compliance into something more positive!