2025, Vol. 8, Issue 1

author(s)
Shivali Kukreja

abstract
Cognitive biases are at work in risk perception, choice, and governance in financial entities. These biases—such as overconfidence, anchoring, and loss aversion—can distort risk assessment, leading to suboptimal financial and regulatory outcomes. This work analyzes the most common biases impacting business risk management (bRM) and investigates behavioral economics-driven interventions aimed at reducing them. Evidence-based on experimental studies, questionnaires from risk practitioners, and a review of previous risk failures show how organisations might establish systems and controls to mitigate bias. Results are used to advance behavioral risk management frameworks that leverage psychological knowledge into governance, increasing risk consciousness and statistical precision in judgments.