Behavioral Risk Management for Improper Risk Taking

Many errors in risk management result from psychological biases in decision-making under uncertainty. Even when we actively seek to eliminate such biases, they remain unconsciously. This suggests a need to change our mind set. Because biases are always with us, we must consider counter-measures to mitigate them when they appear. This paper recommends building a particular framework, as a routine within the traditional risk management process that monitors for improper risk-taking. The routine is called Behavioral Risk Management (BRM). Tools derived from behavioral study, error management and quality control methods are the components of such a routine.