In an article for Compliance Week, Jonathan Aronie writes about how compliance programs work best when they are built for how people actually make decisions, not how companies wish they did.
Drawing on more than three decades advising government contractors and litigating False Claims Act matters, Aronie writes that a stronger compliance program blends traditional legal controls with behavioral economics.
Common behavior quirks like cognitive biases, overconfidence, confirmation biases and base rate neglect, if left unchecked, can undermine compliance efforts. Aronie also highlights “consequence insensitivity,” where decision-makers fixate on the odds of enforcement rather than the potential magnitude of harm.
To counter these tendencies, Aronie recommends practical tools, including “legal pre-mortems” that pressure-test how a hypothetical failure could happen, independent reviews and cross-functional discussions to challenge assumptions, and program design that reduces friction and makes compliant choices easier. He also points to risk matrices as a way to force both likelihood and impact into view.
Compliance programs that are simple, intuitive and behavior-aware are more likely to hold up when “theory meets reality.”
Key takeaways
- Blend legal structure with behavioral insight. Policies and controls are necessary, but programs are more effective when they also anticipate predictable decision-making errors.
- Use concrete tools to stress test risk. Legal pre-mortems, independent audits and risk matrices can expose blind spots before they become investigations, subpoenas or enforcement actions.
- Reduce friction to improve adherence. Programs that make compliance easy to follow and that equip employees to intervene when group dynamics discourage speaking up are more likely to succeed.
Read the full article here.