yaseen anwar : leadership challenges for business success speech by mr yaseen anwar, governor of the state bank of pakistan, at the 12th management association of pakistan convention, karachi, 14 december 2011. * * * honorable delegates, members of map, ladies and gentlemen, it is indeed a pleasure for me to be with you today, on the occasion of the 12th management association of pakistan ( map ) convention on “ leadership challenges for business success ”. first of all, i must express my gratitude to map for inviting me to this gathering and providing me an opportunity to share my thoughts with the country ’ s business leaders. at the outset, i would like to commend map for its role over the last four decades in disseminating management knowledge that has helped in elevating the overall leadership aptitude of our managers. the quality of business leadership and human resources play a significant role in sustaining growth and competitiveness. map has facilitated this by providing a platform to business leaders and professional managers to deliberate managerial developments and establish strong social and professional networking. this yearly convention on key issues provides an opportunity for participants to meet exchange and learn from each other ’ s experience. the theme of this convention is most appropriate, revolving around the concepts of leadership and its role in business progression in a turbulent time. leadership itself is a wide and crucial topic that can be discussed throughout the duration of this convention. having worked with leading global financial organizations in different markets, including now at the state bank, i understand the issues and challenges facing businesses and their leadership, particular during these difficult times. answers to all our problems are certainly not readily available to us. however, conventions such as these enable us to share our experiences and arrive at some shared conclusions. the world today is passing through a turbulent phase that requires a realignment of our leadership approach to managing a business. today ’ s business leader is faced with a multitude of challenges, both on external and internal fronts. the complexities arising in the eco - system of any business may arise in the shape of macro economic imbalances that include sagging demand, inflation, volatility in financial markets etc. while demanding situations on the internal front arise from personnel management, investment decisions, alignment and realignment of business objectives, there should be no ambiguity that there are always complex matrices linking external challenges with internal ones and therefore, successful business leaders will never make internal business decisions in isolation. an uninformed business leader is a leader without a vision and quite likely

of groupthink, 8 improve decision - making, 9 increase the level of challenge, 10 and improve risk management. 11 there are also increasing numbers of studies that show that diversity is a competitive differentiator ; specifically, that when companies embrace gender and ethnic diversity at the leadership level, they are more likely to be successful – or to put it another way, they are less likely to fail. correlation and causation are sometimes difficult to determine, but the correlation between greater diversity and business performance is certainly clear. mckinsey ’ s12 research in this area suggests that companies in the top quartile for gender or racial and ethnic diversity are more likely to have financial returns above their national industry medians. companies in the bottom quartile in these dimensions are statistically less likely to achieve above - average returns. in my own experience, a lack of diversity at senior management and board level in organisations is a leading indicator of elevated behaviour and culture risks – again as evidenced in the tracker mortgage scandal. in this context, it is concerning that a significant imbalance in gender and other diversity aspects remains at senior levels operating in most regulated firms in ireland. approximately 80 % of the most senior and influential appointments in regulated firms in ireland between 2012 and 2016 were male. 13 comparisons are almost certainly worse for any other measure of diversity. this is not a unique circumstance in ireland. the empowering productivity report, sponsored by the uk treasury and the bank of england, concluded that uk financial services had an average of 23 % female representation on boards, but only 14 % on executive committees. 14 this is not to suggest that diversity is all about gender. experiments from behavioural science has shown the importance of personality types on our risk taking behaviours. these findings suggest that having a board made up of more optimistic individuals than pessimistic individuals is dangerous and should be avoided. the uk financial services authority report 15 into the collapse of the royal bank of scotland identified significant overconfidence by board members prior to the financial crisis, and in particular in relation to the acquisition of abn amro. the dutch central bank 16 has also identified a tendency towards consensus and optimism in organisations. overconfidence and optimism can depend on our biological makeup. studies have shown ( e. g. mischel ) 17 that more depressed people, who have a low psychological immune system tend to self - rate their performance in various tests quite accurately. individuals with higher psychological immune systems tend to rate themselves far higher