We use analytics and behavioural science to assess performance, and apply new research and behavioural techniques to cultivate best practice.
Bias and noise are risks for all forms of business decision-making. The more significant the decision, the greater the risk.
Biases and noise have been the cause of many costly missteps by companies and institutions in every sector. Asset managers lose on average losing 100bps annually from the endowment effect alone, insurance companies regularly showing 60% variance across underwriting and pricing decisions, and private equity firms are 30% more likely to default on deals due to decision-making biases.
Top business leaders are increasingly recognizing the risk of bias and noise in business decision-making. Emerging insights from the fields of behavioural economics and cognitive psychology continually emerge to reveal that individuals and institutions do not base financial and other decisions on purely rational considerations.
An greater understanding is continually being gained of the anatomy of irrational biases, and the ways bias operates in our thought processes can often be predicted.
At the same time, business leaders have increasingly recognised how noise, otherwise known as the chance variability of judgements, is an invisible tax on the bottom line of many companies.
Most important of all, the methods and means to counteract biases and noise are becoming more sophisticated and effective. For leaders willing to pursue these approaches, decision-making processes can be made more structured and automated where possible.
To hear more about what we do at Behaviour Lab, please contact us. Click here to get in touch.
“The work we did with Magdalena and the team was incredibly valuable. With increasing pressure on the active fund management industry to deliver returns for its clients, I think more work needs to be done to understand where fund managers add value and where they can improve. This work helped in both areas through analysing historic investing activity on the fund to enable me to understand where I and the team had done well and where we hadn’t. However, the project went beyond just the data and started to help us understand the potential behavioural drivers behind this, with suggestions made as to how we can adjust and improve our process to give better results for our clients. For example, it was identified that we often anchored on the historic outlook for investments that were struggling rather than adjusting to the new reality. The work allowed us to bring in monitoring and review processes to question our conviction in recovering investment opportunities.”
Emerging Market Fund Manager, at a leading Global Asset Manager
By debiasing investment patterns, Behaviour Lab provides analytical solutions that offer clients greater investment returns and significantly better results. Removing the effect biases have on investment decisions will give your customers a competitive edge through better performing funds.
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Even incremental improvements to investments make a significant difference to performance. Together with our clients, we work to tackle this challenge by using analytics and behaviour science to help them make better decisions.
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Behaviour Lab uses analytics and behaviour science to empower insurers to assess their underwriting. Equipped with this knowledge, insurers can reduce variance in valuations and the rate of loss exposure.
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EMAIL:
info@behaviourlab.com
ADDRESS:
Mortimer House
37-41 Mortimer St
Fitzrovia, London
W1T 3JH
United Kingdom
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“The most important quality for an investor is temperament, not intellect.”
– Warren Buffett
