However, let me be clear -- the need for continuing education has not changed; what has changed is the mindset for achieving “banking excellence”. We still need to know about market, credit and operational risks; but beyond these, we now need to also appreciate risks that are not so apparent -- like contagion, concentration, leverage and liquidity.
These four risks -- of 2 Cs and 2 Ls -- are important. At the BSP, we refer to them as “CL-2 risks”. These CL-2 risks are systemic because exposures to them are formed through a chain of bilateral transactions. Once any single point of the chain is compromised, the entire chain is weakened.