. therefore, to fully implement a new strategy or to rebuild an organisation to be effective in a changing environment, it is critical to reshape culture as well. 3 / 6 bis central bankers'speeches the primary responsibility for reshaping culture rests with the executive team, under the direction of the board. it is not a human resources or organisational design exercise. it is a leadership responsibility. it requires leaders to take a long hard look at the current culture, the existing business processes, the work attitudes and behaviours they foster. without first establishing what the current culture is, the issuance of lofty mission statements or long lists of core values are merely paying ‘ lip service ’ to implementing effective cultural change. since employees tend to take their cues on what is important and how to behave from their leaders, negative activities and behaviour at the top foster negative behaviours further down the organisation. “ a good organisational culture is about more than avoiding good people doing bad things ; it is about equipping and enabling good people to do ever better things17. ” a firm in seeking to effect cultural change can take some practical steps to achieve this aim. i will suggest five as a starting point : 1. communicate and " walk the talk " - the cultural values and expectations of the firm need to be consistently communicated and modelled by the top, middle and lower management levels. 2. enhance diversity at senior levels – meaningfully addressing the acute lack of diversity at senior levels requires : more ambition, including in targets and measures ; more than lip service being paid to diversity programmes ; better building of pipelines of talent ; considering the overall construct and functioning of the executive management layer when making appointments ; and identifying and reducing barriers to change. 3. practice, process, performance – principles and values need to be reinforced through practices and processes, including training and particularly performance management. there must be clear alignment between individual roles and objectives and wider purpose, strategy and outcomes, with people held accountable for their actions. 4. ongoing assessment and checking – boards and executives need to have mechanisms and measures to understand whether the culture they espouse is consistent with the culture of the organisation, and consider how they would identify where it is not. considering how decision - making, risk identification, product development, the use of behavioural economics, the treatment of whistleblowers and everything in between works in an organisation is key to understanding the culture of the organisation. boards and executives need to consider the information they receive and

important to emphasise that a starting point for operating in a regulated environment is compliance with the rules and regulations that govern the industry. but it is also clear, that rules and regulations are not sufficient to always drive the appropriate outcomes from both a prudential and a conduct perspective. the fact that something is considered legal does not necessarily mean it is right, nor does it mean that it is fair or equitable9. “ so, the law is just the last line of defence. ethical behaviour is more than just complying with the 1 / 6 bis central bankers'speeches letter of the law. when bankers take decisions, they must be aware that there is more to consider than just the legal and financial aspects10. ” i would note that these types of issues are not unique to the financial services industry. there are many examples of large - scale conduct issues in many industries. for example, the behaviours of some pharmaceutical firms in relation to the opioid crisis11 ; the vehicle emissions scandal in the motor industry ; or the recent super complaint covering multiple industries launched by citizens advice in the uk on how loyal customers pay more for essential energy, mobile, broadband and financial services12. it is a legitimate question to ask why such behaviour repeats itself across different geographies, times and industries. however, my responsibility only extends to the financial services industry, and what can be done to build on the extensive rules that are in place to drive better prudential and conduct outcomes. and this is why, as we have moved from a period of intensive crisis management to one of crisis prevention and enhancing resilience we have increasingly focused on culture and diversity in financial services firms. as you have already heard today, culture is integral in driving peoples ’ behaviour in how they make decisions, treat consumers, assess risk and ultimately how the organisation is governed. a culture that is operating ineffectively can encourage and reinforce practices that are unsound, unsafe and threaten the stability of a firm and how its customers are treated. diversity matters in this context, diversity matters – diversity of thought, background, experience and intrinsic and extrinsic characteristics. indeed, a lack of diversity at senior management and board level is a leading indicator of heightened behaviour and culture risks. similar people looking at similar information and facing similar circumstances are, unsurprisingly, likely to rely on similar assumptions and make similar decisions. this type of groupthink contributed to the depth of the financial crisis internationally and in ireland and contributed