Burnout is a financial crime risk

We have all read the final notices, consent orders and deferred prosecution agreements where issues with financial crime controls have resulted in real financial crime risks materialising. We also know from these notices that even in a world of technological advancement, it is still the actions and decisions of people, across the business and all three lines of defence, that ultimately result in inadequate implementation and application of financial crime risk management frameworks and controls.?

For many years now we have seen the human element put down to lack of training or skills, poor compliance culture and/or inadequate levels of staffing. And these are all legitimate reasons for issues to persist.

But is there something else? Are there other factors that could impact people’s ability to spot red flags, make decision-making sub-optimal and ultimately result in the same outcome of control adoption or implementation being inadequate, failing and financial crime risk materialising? In my view, yes.

It could be burnout.

To manage financial crime risk, we rely on individuals to:

• have sound risk perception – to tap into that intuition that something doesn’t seem right, evaluate what level of risk is tolerable and differentiate between potential and crystalised risk;
• assimilate significant amounts of information and make timely and robust decisions (often under pressure);
• be resilient to challenge and, where needed, be steadfast and confident in their judgement and decisions;
• have capacity to document an audit trail of their decision-making; and
• be dedicated to the cause, passionate about what they do and who they are helping, day-in-day-out.

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Burnout impacts all these facets of human behaviour.

?Recent psychology recognises three different dimensions of burnout:

• Exhaustion - where you feel constantly depleted;
• Cynicism - where you feel detached from your job and the people around you; and
• Ineffectiveness - where you feel you are never able to do a good enough job.

Studies show stress and in particular chronic stress (aka burnout) negatively affects our?cognitive performance and approach to risk?and?decision-making.

• Our?ability to process?and apply?reasoning?to complex decisions?is reduced;
• We are more likely to?avoid?or?postpone?decisions; and
• We perceive risk differently - we are more likely to make?unfavourable decisions?that?take on more risk.

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When individuals responsible for managing financial crime risk are burnt out, and experiencing all the above, it is not unreasonable to assume they might:

• Feel too exhausted or depleted to challenge others on critical decisions;
• Become less likely to spot red flags or lose confidence in their ability to do so;
• Feel overwhelmed and paralysed by complex tasks, decisions and challenging environments;
• Question their own judgement and struggle to articulate and document the rationale behind key decisions;
• Feel as if they are no longer making a difference, and become disengaged from ‘fighting the good fight’; and/or
• Make more rash, riskier choices or postpone decisions, which cause financial crime to go undetected.

All of these have a significant impact on individuals’ ability to detect and managing financial crime risk.

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So, what can be done?

?It is important for us as a financial crime community to acknowledge the impact mental health has in our industry and support one another, including those experiencing burnout, so collectively we can continue to play the important role that financial crime practitioners play, within individual institutions and society more broadly.

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If you recognise some of these feelings of burnout yourself:

1. Speak Up – burnout can feel a lonely place, but sadly you are not alone. A 2019 study showed nearly 8 in 10 full time employees experience burnout ‘at least sometimes’[1]. Share how you are feeling with a friend, colleague, loved one, whoever you feel comfortable with. The act of talking about our challenges and emotions with someone we trust has been scientifically proven to reduce stress and emotional distress (and has the added bonus of strengthening our immune system). There is a reason for the old adage ‘a problem shared is a problem halved’
2. Seek Help – whilst a trusted confident is great, they may not have the tools to help you recover from and prevent burn out longer term. The long term physical and mental impacts of chronic stress and burnout are very real and in the words of writer Connie Wang "Sacrificing your health and potentially your self-worth should not be the price to pay to participate".

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If you are a people manager, or in a role leadership role:

1. Listen – as mentioned above simply providing a safe space for employees to share, without judgement, has a big impact.
2. Acknowledge – acknowledge the all the real risks involved with employee burnout. Reduced productivity, cost of absence, employee retention (and the subsequent hiring costs to replace lost talent), potential financial crime and regulatory risk.
3. Walk the walk – as financial crime professionals we understand the important role leaders play in creating a compliance culture, and creating a culture in your own team is no different. ‘Tone from the top’ isn’t really enough – talk the talk but also walk the walk. Demonstrate through your own actions, in a way that is authentic to you, that preventing burnout is a priority - for your employee’s sake, your business’s sake and your own sake. Be open yourself, this will encourage your team to speak up. Reconnect with your purpose and your strengths, to counter feelings of cynicism & ineffectiveness. Set the precedent of working reasonable hours, setting boundaries and switching off to combat exhaustion. If you struggle with any of this invest in ongoing support for yourself, as well as your employees ?– it will reap rewards. ?

If you need a safe space to talk about your current circumstances or want to discuss how to tackle burnout, for yourself or within your team, I am here for you. Let's connect over a virtual coffee today.

Recommended reading:

“Big Feelings: How To Be OK When Things Are Not Ok – Liz Fosslien + Mollie West Duffy. Considers not only burnout, but other ‘big feelings’ such as regret, comparison, uncertainty & perfectionism.

[1] 2019 Gallup study: 28% of full-time employees reported feeling burned out at work “very often” or “always.” An additional 48% reported feeling burned out “sometimes.”