hiverisk aml compliance audit

How the use of psychological safety support risk and compliance functions

i love you text on pink and white polka dot background

Last week’s Compliance for Law Firms session saw Elizabeth Hyde of Hesper GRC discussing how the use of psychology, in particular psychological safety, can help and support risk and compliance functions by encouraging a ‘speaking up’ culture within an organisation. Whilst also focusing on how psychological safety fosters an environment of creativity, innovation and growth. The following is a brief summary of some of the topics covered.

Definition of psychological safety

“Psychological safety is the belief that you can speak up with ideas, questions, concerns, or mistakes without fear of negative consequence.” From a business standpoint, psychological safety is related to interpersonal risk and the subconscious risk calculations people make in meetings. It involves weighing the potential costs of speaking up against the potential benefits.

The session discussed several case studies, one involving Rodney Rocha, head of the debris assessment team at NASA, who noticed foam striking the left-wing of the shuttle during launch of the Colombia. Despite raising concerns with his manager, his requests for information were declined. During a subsequent team meeting, Rodney failed to speak up about his concerns due to the perceived hierarchy and power dynamics.

Factors Affecting Psychological Safety

The session outlined several common factors for psychological safety:

Fear of Negative ConsequenceFear of being ridiculed, rejected, or punished for speaking up
Hierarchical StructurePower dynamics and perceived authority figures can intimidate individuals into silence
Fear of Emotional RejectionFear of being embarrassed or ostracized for expressing opinions or concerns
Amygdala TriggeringThe brain’s fear and threat detection system can be triggered, releasing cortisol and overriding rational thinking

There was a brief further discussion on the amygdala and how this part of the brain that can affect our memory and ability to think innovatively. When the amygdala is on high alert, it can divert resources away from the hippocampus and prefrontal cortex, disrupting our memory function and ability to think critically.

Measuring and improving psychological safety

The session highlighted the importance of capturing employee’s feelings, even using simple questionnaires can provide an overview of how a team is feeling, for example:

  • If I make a mistake in this team, is it held against me?
  • Are members of this team are able to bring up problems and tough issues?
  • Do people on this team sometimes reject others for being different?

Along with strategies to improve overall mental wellbeing which included:

  • Active Listening: Paying attention to team members and giving them your undivided attention.
  • Respectful Feedback: Providing feedback that is constructive and respectful.
  • Acknowledging Mistakes: Encouraging team members to report mistakes and near-misses, and using these opportunities to learn and grow.
  • Psychological Safety Pledge: Creating a collective commitment to upholding psychological safety within a team.

It was stressed that psychological safety is antithetical whistleblowing; if an employee feels the need to make a confidential report outside of the organisation this represents a failing of psychological safety.

Overcoming Barriers to Psychological Safety and dealing with ‘frequent fliers’

The session highlighted the issue of ‘alligator’ team members who contribute to a lack of psychological safety and the need to address their behaviour. When dealing with ‘frequent flyers’, the need for there to be escalating consequences was discussed. As a loose guide, the first time, a mistake is made, it’s a free card. The second time, there’s a robust conversation. The third time, it’s a more serious consequence with potential disciplinary action.

As this was a closed session subject to Chatham House Rule, many of the valuable insights and detail cannot be reported publicly. For the full ‘Compliance for Law Firms experience’ – attendance at these sessions is a must! Get in touch.

Leave a comment

Your email address will not be published. Required fields are marked *