Another aspect that needs to be mentioned is being paranoid about the worst that could happen. This is sometimes referred to as productive paranoia. Central bankers need to excel as risk managers – knowing what could go wrong and prepare for the worst that is yet to come. In part it involves building the buffers to prepare for the unexpected events before they happen. When I am asked the question about how we are going to manage ‘the lift off’ – the normalisation of interest rate by the Federal Reserve in the United States – my response is that it is not what we will do now but what we have done before it happens that will see us through this period. It is not only the buffers that have been built but also the capability that has been developed that will better allow us to intermediate and thus absorb the shock. This will enable us to withstand the volatile financial flows that are already occurring in anticipation of this eventuality. Sometimes there are also Black Swan events. These are defined as those developments that have a low probability of happening and that is difficult to predict and anticipate. Being paranoid and building the resilience against such shocks will contain its damaging effects. Therefore continuous rigour needs to be applied all the time, during the good times and the challenging times. Vigilance, detecting developments that could signal danger, early recognition of risks are all important.
Also knowing how your risk profile changes over time will avoid one being taken by surprise. Central banking is therefore not for the faint of heart. It not only demands the high levels of energy – not just the physical energy, but that of the emotional, spiritual and the mind. When tested to the limit, it is from these sources of energy from which the strength is derived. Investing in these sources of energy will avoid its depletion. Energy should not be taken for granted. Then there is the courage that is needed. It is derived from your convictions and values that you hold, reinforced by your sense of purpose and what motivates you. At the Leadership Energy Summit Asia in 2014, I spoke of having the ability to generate and ride on the positive cycle of leadership energy. In mobilising energies in the organisation to be aligned to achieving an outcome, it generates a second round of energy burst from others in the organisation. The continuous positive energy loop provides continuous motivation and momentum in a two way direction and intensifies energy in the organisation. It is a mutually reinforcing phenomenon that I have experienced in the Bank time and again. 2  BIS central bankers’ speeches  Let me conclude my remarks. The demands on leadership is immense. In the current international and domestic environment, it also requires leadership energy that is sustainable.