According to these proposals the Tier 1 capital base should be sufficiently strong to ensure that banks are in a better position to absorb losses on both a going concern and a gone concern basis. The revised capital framework will strengthen the capital requirements for counterparty credit risk exposures arising from derivatives, repos and securities financing activities. As the existing regulatory ratios did not prevent institutions from taking on excessive leverage, moreover, the proposed leverage ratio should be a welcome addition to the regulatory toolkit. The ongoing deleveraging by banks is indeed having an adverse impact on the flow of credit to the real economy, accentuating the pro-cyclical effect. Financial institutions will, therefore, be required to build-up robust capital buffers during good times, which can be drawn down during periods of stress. The proposals also promote a more forward-looking provisioning to provide for future credit losses, and thus lessen the procyclical effect of the current “incurred loss” method. Finally, the introduction of a global minimum liquidity standard is foreseen that includes a stressed 30-day liquidity coverage ratio requirement as well as a long-term structural liquidity ratio. Moves are also underway to correct what is considered to be insufficiently transparent and accountable behaviour by credit rating agencies. After having underestimated the risks of mortgage-related bonds in the sub-prime saga, the agencies have recently featured in a perverse dynamic characterised by dysfunctional markets for certain sovereign securities in which prices do not reflect fundamentals, on the one hand, and the predictable rating downgrades, on the other.

Diversity may be the true mother of all invention – and the father of all risk management. That being the case, what should be the next steps in harvesting these benefits? We have all got a lot on our plates: from the uncertainties of Brexit to the complexities of geo-politics; from wrenching technological change to rising inequality; from simmering mistrust of big business, big banks and big government. We would be forgiven for putting diversity issues on the back-burner while these more pressing matters resolved themselves, would we not? While this sounds reasonable, I think it would be exactly the wrong response. This environment is precisely one in which we should be pressing the accelerator, rather than the brake, on diversity policies and practices. Why? Because an environment of acute uncertainty and ambiguity is one in which the organisational returns to diversity are likely to be greatest. What is the best safeguard against the ambiguities of geo-politics? A workforce with diversity of thought and experience who can juggle competing world views. How are the opportunities of technology best to be harnessed? With a creatively diverse workforce, masquerading as five year olds. How is trust to be rebuilt among diverse and disenchanted customers and stakeholders? By having a workforce which is their mirror-image, who can understand their needs and perspectives. And how are entrenched inequalities in income and wealth to be redressed? By first tackling inbuilt inequalities in educational attainment and social mobility. These are fine as aspirations, but how are they to be realised?