Financial institutions with gender-diverse boards and management will be better placed to navigate the coronavirus crisis, according to experts.

But they warn that, unless banks put gender balance front and center of their crisis management strategy, the pandemic could be detrimental to the progress made by the sector.

"The real risk in the short term is that diversity and inclusion initiatives are seen as 'nice to have' and fall off everyone's radar," said Jessica Clempner, a principal at Oliver Wyman and lead author of the company's "Women in Financial Services 2020" report, which was released in November 2019.

That is despite research suggesting banks that embrace gender diversity at a board level are more likely to come out of a financial crisis in better shape. For example, a discussion note released by IMF researchers in 2018 found that banks with a higher share of women on their boards were more stable in 2008 when the global financial crisis hit. Banks with more female board members generally had higher capital buffers, a lower proportion of nonperforming loans and a greater resistance to stress, it found.

Halting progress

With 20% women on executive committees and 23% on boards globally, the financial services industry is now making the fastest progress to increase the number of women in senior leadership roles since Oliver Wyman began its index in 2003, according to its latest report.

The threat of an economic downturn is one headwind that could halt or even reverse this progress, it said, pointing to the debt crisis in Greece as an example of how gender balance can be deprioritized during economic turmoil. Greece had just 6% representation of women on executive committees in major financial services companies as of 2019, according to Oliver Wyman's report, compared to 20% in the U.K. and 33% in Sweden.

"If we don't pay attention, the coronavirus crisis will absolutely negatively affect women," said Grace Lordan, an associate professor in behavioral science at the London School of Economics, who researches inclusion in financial and professional services in the City of London.

Job cuts, childcare

The most immediate impact will be felt by women working from home during the lockdowns, as they are likely to be burdened more than men by domestic duties such as looking after children while schools are closed, Lordan said.

Women, particularly in banking, have also traditionally been disproportionately victims of redundancies following recessions, said Lordan, who released a study in 2015 on employment effects of the 2008 financial crisis in the UK.

"People who were most likely to keep their jobs were white males who were highly educated. And women did lose out," she said.

The study also found a "significant" racial labor market gap, which only widened as unemployment rates went up.

These risks highlight the importance of financial institutions paying attention to diversity during the crisis, or they "are likely to erode some of the gains that might have happened in the past," Lordan said.

For example, they could avoid making performance assessments based on the lockdown period and should be auditing the impact of redundancies and pay cuts that may come out of the crisis, she said.

"Most leaders aren't bad people. They don't want to hold back women or any other group. It's just that when we have these really stressful periods, we don't notice," she said.

Accelerating opportunities

There are also opportunities to be found in the current crisis, but it requires that financial services firms dedicate efforts to embed the positive changes once it is over, according to Oliver Wyman's Clempner.

Lockdowns can normalize remote working and "accelerate" flexibility initiatives that companies may have attempted to put in place in the past, she said.

"Suddenly, an entire industry is being forced to work from home. Companies have been forced to make sure everyone's got the right tools, but there's also a shift in behaviors; it's getting everybody, men and women, used to a different way of working."

This is good news for gender balance in finance, as it will particularly help women manage work-life balance, she said, adding that it could also open up the talent pool to people who have historically been unable to take on a traditional nine-to-five job.

The fact that whole families are sent home during lockdown could also drive a cultural shift in terms of who is expected to take on childcare and other responsibilities at home, Clempner said.

READ MORE: Sign up for our weekly coronavirus newsletter here, and read our latest coverage on the crisis here.

Diversity brings stability

Gender balance in companies is a growing concern for investors as they recognize diversity as a key driver for better performance. In March, Goldman Sachs Group Inc.'s asset management unit introduced a new policy to vote against nominating committees around the world that fail to include at least one woman on the board.

The coronavirus crisis will likely become another reminder of the importance of gender diversity, as differing views are integral to managing complex situations and uncertainty, said Angela Gallo, lecturer in finance at Cass Business School. "The more different views that are brought to the table, the better," she said.

Gallo's latest research found that gender-diverse boards on banks can reduce misconduct episodes, a conclusion that is increasingly relevant for banks during volatile times when misconduct risk may be on the rise, she said.

Diversity is key to stability, Clempner said, and this was evident in the 2008 financial crisis. "In the last crisis there was a lot of groupthink and lack of challenge and diversity of thought, and that led to many of the issues being exacerbated; whereas if you have diverse teams, if individuals feel included, then they are more able to raise concerns and bring different perspectives into the crisis discussions, which ultimately leads to better outcomes," she said.

Lordan agreed that "now more than ever, we need those diverse perspectives around the table," but said there is a risk that leaders will be less open to challenging views during a crisis, as individuals typically have emotional responses to uncertainty and stress.

"When we have emotional responses, we like things that are familiar to us, we like to be around people who are not challenging, which is exactly the opposite of what you might want," she said.

As such the virus crisis will likely reveal just how serious banks have been about gender balance, Gallo said.

"It will be an interesting test of whether these [gender inclusion] policies were there only for the good times or they are going to be in force now that we really need them," she said.