Recognizing and Mitigating Cognitive Biases: A Threat to Objectivity

Cognitive biases are systematic errors in thinking that occur when we process and interpret information; they influence how we make decisions and render judgments. These erroneous and innate patterns of thinking come from our brain’s automatic functioning and its tendency to filter information through personal experience and preferences. Biases can cloud our judgments and lead us to make incorrect or suboptimal decisions.

However, biases are not all bad. Many serve an adaptive purpose to help us simplify information processing, expedite decision-making, and solve daily routine problems. Biases can also increase our mental efficiency by enabling us to make quick decisions unconsciously without deliberation.

No one is immune from biases. They affect decision-making in all industries, cultures, disciplines, professions, and wide-ranging areas. Biases affect everyone as an individual, an employee, a professional, and a participant in any role.

This book will raise internal auditors’ awareness of how cognitive biases influence their thinking and decision-making as it relates to business performance. Cognitive biases are systematic predispositions in thinking that occur when people are processing and interpreting information; they influence how we make decisions.

Included are examples of cognitive biases that are inherent to business strategies, decisions, and actions. Internal auditors need to consider their impacts not only on their assurance and advisory work, but also on management of the internal audit function, and develop appropriate responses.

This book will help internal audit achieve its mission and vision by:

• Raising the awareness of how cognitive biases influence our thinking and decision-making.
• Identifying the common cognitive biases and their impact on the business and audit environment.
• Helping management to minimize and overcome biases that might influence their thinking, decision-making and, ultimately, achievement of business objectives.
• Helping the audit team to minimize and overcome biases in executing assurance and advisory work.
• Helping audit management to minimize and overcome biases in managing the audit function and stakeholder relationships.
• Showing how to offer insights, influence behaviors, and challenge biases in a professional manner. 

About the Author 

Angie Chin, CIA, CRMA, CCSA, CPA, is a retired executive with 40 years of global leadership experience in audit, risk management, corporate functions, and business operations at General Motors Company and the Federal Reserve Bank of Chicago.

Angie believes that a strong foundation in governance, risk management, and controls is essential for any leadership role. Her work experience and IIA engagements enabled her to make a difference working across all three lines, earning a seat at many tables, and serving on The IIA’s and other nonprofit boards.

Internal audit has to lead by example. At the Fed, Angie implemented many major changes by being resourceful and innovative, embracing constraints and making effective tradeoffs. She expedited transformations by defying conventional wisdom of going slow and incremental.

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