Managing Risk and Uncertainty in the Mortgage Loan Process : A Case Study of Private Advisors’ Decision-Making Behavior in a Swedish Bank

Sammanfattning: Monitoring credit risks in an effective way is crucial, and Swedish banks can to a great extentuse their own models and terms in the evaluation process of an individual’s creditworthiness.There is however a lack of transparency in decision-making process of mortgage loans.Besides the quantifiable factors, uncertainties such as future and external events need to beconsidered. Due to the difficulty of quantifying the uncertainty aspects, hiring risk-averseindividuals becomes important. The aim of this paper is to investigate the risk and uncertaintyaspect around the mortgage loan process in a Swedish bank, more specifically the privateadvisors’ decision-making involving their own subjective judgments in combination with theobjectivity of the mechanical evaluation systems. By using previous literature on the field ofrisk and decision-making, in combination with qualitative interviews from a case study ofeight private advisors, this paper aims to map out the mechanisms that drive decision-makingunder risk and uncertainty. From the empirical findings it was evident that heuristics andintuition played important parts in the advisors’ decision-making process, and that the relianceon technology varied between the advisors. The evaluation depended on the individualadvisor’s judgment, the applicant, and the situation.