##ised formula for calculating solvency requirements. the framework is calibrated to provide an incentive for firms to invest and develop more sophisticated risk management. this is to be welcomed and encouraged. but there are risks to manage as well. solvency ii ’ s use of internal models is broadly similar to that of the basel framework but in fact provides even greater scope to firms in their modelling, as basel set certain bis central bankers ’ speeches minimum correlation assumptions for models but solvency ii does not. there is clearly a strong incentive for insurance companies to optimise their use of capital under the directive and to do so through the adoption of models. this is perhaps stronger in the general insurance market than in the life market due to the anticipated relative strengthening of solvency standards. internal models are, however, subject to supervisory approval, and of course approval by the insurance company ’ s own board. to my mind it is important that the approval process doesn ’ t get bogged down in detail such as endless documentation reviews but stays focussed on the key drivers of the overall solvency calculation arising from the use of a model. regulators and industry spend a lot of time arguing about the detailed calibration of very specific risk factors under the solvency ii framework. but it is when the solvency requirements for different lines of business and different aspects of risk are combined that the overall solvency requirement can swing significantly as a result of the judgements that are made regarding correlation and diversification. if this is where the big swings in numbers can occur, it should be at the forefront of the regulatory approval process and above all in the challenge from insurance companies ’ boards. diversification is of course an inherent part of the insurance business model but as you are aware, the risk is that diversification in times of stress is more apparent than it is real. the assessment of correlation and the level of diversification that is recognised is not a matter for a black box or a theoretical formula. it is inherently a matter of expert judgement for an insurance company ’ s senior management and boards, not just its quants and risk team. it is right and proper that boards should be expected to challenge vigorously the amount of diversification benefit being claimed in internal models even if they don ’ t know the internal plumbing of copulas or correlation matrices. regulators should expect them to take a prudent and conservative approach and to ask challenging questions about how the models will hold up in times of stress. the third dimension of solvency ii

the establishment of the irish free state, universal adult suffrage was granted. which means we can rightly celebrate key moments in history such as women earning the right to vote. but we can never grow complacent that the work is done. * * * participation which brings me to the issue of participation. earning the vote, which hanna sheehy skeffington called the “ keystone of citizenship ”, has indeed led to “ fields that are broader and full of interest ”. 5 whilst there are many dimensions to the achievements of women, i am sure you will appreciate that as an economist by training and a central banker by profession, i ’ m fond of using statistics to tell a story. for economists a key metric is labour force participation. just 30 years ago, for example, the labour force participation rate for women in ireland was 34. 4 per cent. this meant that two thirds of the female working age population were not in any way engaged in the labour market. 6 the comparative figure for men was 70. 8 per cent. 2 / 5 bis central bankers'speeches this was a staggering difference. in 2017, the female participation rate stood at 55. 7 per cent, above the eu ( 15 ) average of 52. 5 per cent. the male participation rate was still above the eu average, at 68. 6 per cent, and more importantly, the gap between men and women had narrowed to 16. 1 percentage points. still a large gap i know, but the trend has certainly moved in the right direction. these numbers may seem abstract, but they have a significant impact on the economy. economic research has highlighted the importance of the rise in female participation through the late 1990s and early 2000s in ireland. 7 it is important that social policies support this. recent research from the san francisco federal reserve for example, found that altering parental leave policies in the us to encourage female participation to rise to levels observed in neighbouring canada could add as many as 5 million prime - age workers to its labour force. 8 * * * diversity of course, women participating in the labour force is one matter, equality of opportunity is another matter again. in the ‘ world i work in ’ we have a long way to go. in 2017, the central bank first published data on the level of gender diversity at senior levels of financial services firms we regulate, and we have committed to publishing these data on an annual basis. 9 the results were glaring, but unfortunately unsurprising, in that