A decade-long banking veteran argues that while financial institutions rigorously stress-test portfolios and credit decisions, they often overlook the state of the individuals interpreting these data and making decisions based on them.
The brain's response to stress can hinder complex decision-making. When the amygdala detects a threat, it reacts before the prefrontal cortex fully processes the situation, narrowing attention and increasing the sense of urgency. This can lead to impulsive reactions, making access to expert knowledge more difficult.
Seniority does not shield against this issue. Gallup reports a global drop in employee engagement to 20% in 2023, down from 23% in 2022, with productivity losses estimated at $1 trillion. Middle management saw a sharper decline, with engagement dropping from 27% to 22% in one year. Top executives report higher engagement but also increased stress, anger, sadness, and loneliness.
Emotional intelligence, which is critical in finance, has also declined. A study found a reduction in emotional intelligence between 2019 and 2024. Leadership under stress can affect entire teams, turning individual risks into institutional ones. Poor decisions can impact financial performance, increase team stress, and lead to employee turnover.
Patricia Ordody, founder of Health is Wealth in Zurich, advocates for training in emotional regulation, resilience, and cognitive performance to prevent these issues. She emphasizes the need to treat the decision-makers' mental fitness as seriously as the quality of their decisions.
