senior levels of regulated entities can help to reduce the likelihood of groupthink, increase the level of challenge and improve decision making and risk management. there is also a clear connection between the diversity in an organisation and its culture. these are all attributes that as a regulator we should and do care about. groupthink, in particular, was identified in the nyberg report as a contributing factor to the financial crisis in ireland. 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, and consequently prudential and conduct risks. if we look at the causes of the financial crisis, we can see clear linkages to behaviour, culture 3 / 7 bis central bankers'speeches and diversity. it is clear that there were multiple failures and multiple individual and collective decisions leading up to the financial crisis. for example, collective groupthink, business model and strategy failures, governance and control issues, financial misconduct, excessive optimism, regulatory failures, political interference and so on. there are behavioural and cultural linkages across all of these failures. the behaviours and underlying cultures within financial services firms were wholly inappropriate. short termism was incentivised, particularly with respect to shareholder returns. effective internal challenge of the prevailing views was not. while many improvements have been made, not enough progress has been made with respect to underlying behaviours, cultures and incentives. the culture in the retail banks has led to catastrophic failings in the treatment of customers affected by the tracker mortgage scandal, which has done further lasting damage to the reputation of the irish banking sector. globally, there is evidence of cultural failings across the financial services sector, be it wells fargo, the libor scandal, rbs, ppi and so on. moreover, at an individual firm level, i have seen too many examples where regulated firms are having to be pushed too hard by the regulator to address failings and remediate issues, where the focus is on the letter of the law and not the desirable outcome. in some cases this has led, ultimately, to the failure of the firm when earlier acceptance and change would have, perhaps, preserved it. i spoke at an event last year21, during which i highlighted that the consequential breakdown in public trust and confidence in financial services, and the need for meaningful cultural change to repair and restore trust. as the reputation of financial services firms has been damaged there is a tendency for a greater

put in place to deliver this outcome. we will analyse data showing the outcomes from a firm and a sector perspective on an annual basis. we expect to publish data in this regard this coming march. we are including aspects of diversity in the upcoming behaviour and culture review of the retail banks. this is a major step forward in our approach, which we will apply in other reviews in different sectors. it puts the central bank at the forefront, internationally, of the regulatory work on diversity. we are reviewing our governance codes and requirements to be more explicit in terms of 5 / 7 bis central bankers'speeches expectations regarding diversity policies. we will also be considering whether our own actions are inhibiting change. for example, in our consideration of fitness and probity applications, are we considering exclusively on an individual basis or a more rounded consideration of the construct and diversity of the board, executive and so on? that is not to say that we should lower our standards, but that we will be enhancing how we consider the effectiveness of the board and the executive as a whole. risks and barriers i would accept that change is not without risk or challenge. there are deeply entrenched issues that need to be overcome – many of which are societal. recent studies of the gender pay gap affecting uber drivers25 are interesting in highlighting deep rooted issues and behaviours that go beyond an individual firm ’ s, no matter how large, ability to change. there is also more controversial research which shows correlation ( and argues causation ) between higher levels of diversity and higher levels of societal mistrust26. whatever the drivers for this mistrust, it is clear that an organisational level and a more macro level, a focus on inclusion is critically important too. but these risks and barriers are relatively small compared to the potential benefits at both a system wide level and an individual firm level if they can be overcome. conclusion in my role i am focused on ensuring that the central bank is safeguarding stability and protecting consumers, and delivering a vision whereby the financial services system in ireland delivers for both the economy and its customers in a sustainable way over the long term. there is clearly more to be done to have confidence in the achievement of this vision for the irish financial services system. diversity and inclusion has a role to play in achieving this vision. this includes through ensuring that regulated firms have appropriate and effective governance, risk management and control frameworks in place, that their actual cultures are consistent with their stated aspirations, and that their