Behind every business decision lies the human mind—with all its instincts, shortcuts, and blind spots.
In a recent Author Spotlight hosted by the Enterprise Risk Management (ERM) program at Columbia University School of Professional Studies (SPS), ERM associate director and full-time lecturer Rich Lauria and coauthor John Burkhardt (CEO of Capita Solutions) explored how understanding those mental patterns can transform enterprise risk management.
Their discussion, moderated by Deputy Program Director H.S. Bob Kostakopoulos, examined how behavioral science and cognitive insights can help organizations recognize bias, make better decisions, and build resilience in an increasingly complex world.
Merging Behavioral Science with ERM
Lauria and Burkhardt began the discussion by explaining how their collaboration began in 2019, combining Lauria’s actuarial expertise with Burkhardt’s background in neuroscience. They emphasized that traditional ERM frameworks often assume rational decision-making, even though real-world outcomes are shaped by cognitive heuristics and behavioral tendencies. Drawing on research from behavioral economics, neuroscience, and decision science, the authors discussed foundational ideas from luminaries such as Daniel Kahneman, Amos Tversky, Richard Thaler, Miguel Nicolelis, and Wolfram Schultz.
“Behavior comes from the brain,” Burkhardt said. “The human brain evolved not to think logically, but to survive. We use shortcuts and heuristics. Sometimes they help us, sometimes they hurt us. And when it comes to risk management, those shortcuts can really lead us astray.”
Understanding these patterns, the authors explained, allows practitioners to anticipate and mitigate errors, turning intuitive tendencies into actionable strategies.
Practical Tools for Better Decision-Making
Their newly published textbook, A Behavioral and Cognitive Approach to Enterprise Risk Management, translates behavioral insights into practical applications.
“The latter chapters focus on ‘Applications to ERM,’ where we show how these concepts play out across the various stages of the process in real-world conditions, from risk identification to decision-making under uncertainty,” Lauria explained. The authors highlighted tools such as premortems, assigning devil’s advocates, and scenario analysis as practical ways to counteract potential negative impacts from behaviors such as groupthink and overconfidence.
The discussion also drew a distinction between risk preference and risk perception, noting that perception is highly influenced by information and framing. Using examples such as merger and acquisition (“M&A”) “deal lust,” bank runs, and private credit markets, the speakers illustrated how behavioral patterns—like herd behavior, fear of missing out (“FOMO”), and confirmation bias—can amplify both organizational and systemic risk. They stressed that effective ERM must account for these human factors through its systems, incentive structures, and communication channels.
Insights and Takeaways for Practitioners
Throughout the event, Lauria and Burkhardt encouraged attendees to view cognitive biases as natural tendencies rather than flaws. “You can’t eliminate bias—you can only design processes that help counteract it,” Lauria said. They also reflected on their collaboration, noting how teaching together and conducting research since 2019 deepened their understanding of applied business and cognitive science.
The authors concluded by underscoring the broader value of integrating behavioral perspectives into ERM: improving conversations, enhancing decision quality, and strengthening organizational outcomes. Attendees left with practical strategies, real-world examples, and a deeper appreciation for how insights from psychology and neuroscience can make enterprise risk management more effective in today’s complex business environment.
To view a recording of the full Columbia SPS Author Spotlight event, please click this link.
About the Program
The Master of Science in Enterprise Risk Management (ERM) program at Columbia University prepares graduates to inform better risk-reward decisions by providing a complete, robust, and integrated picture of both upside and downside volatility across an entire enterprise. For both the full-time and part-time options, students may take all their courses on Columbia’s New York City campus or choose the synchronous online class experience.
Learn more about the program here.
