Vítor Constâncio: Presentation of the European Central Bank Annual Report 2015 to the Committee on Economic and Monetary Affairs of the European Parliament Introductory remarks by Mr Vítor Constâncio, Vice-President of the European Central Bank, to the Committee on Economic and Monetary Affairs of the European Parliament, Brussels, 7 April 2016. *  *  *  Mr Chairman, Honourable Members of the Committee on Economic and Monetary Affairs, Ladies and gentlemen, I am honoured to once again present the ECB’s 2015 Annual Report to your Committee. Please allow me to take this opportunity to express my heartfelt thoughts, and those of the ECB’s Executive Board and ECB staff, for the victims of the recent attacks in Brussels, in the heart of Europe. Our thoughts are also with their families and friends. Events like this remind us that Europe must stand together. And our institutions have a role to play in this respect. The presentation of our Annual Report to those representing the European Union’s citizens is a key element of our accountability, which is a necessary counterpart to our independence. That is also why we have decided to publish our feedback to the input you provided in the Resolution on the 2014 Annual Report, together with this report. This is the first time we have done so. This decision reflects the importance of having a fruitful dialogue between our institutions, for the benefit of European citizens.
This morning, I would like to talk about some of the changes we are seeing in the practice of risk management and reflect on important priorities for risk management as observed from our work at Bank Negara Malaysia with the financial industry. I will then offer some brief perspectives on business continuity management and close with some final thoughts on the prospects for the insurance industry in Malaysia to contribute towards the advancement of risk management capabilities across Malaysian businesses. Changing practices in risk management Since the financial crisis, risk management practices have come under intense scrutiny. The spectacular failures in risk management in the lead up to the crisis prompted deep reflections on what had gone wrong with risk management systems and practices – not least of all among companies that had invested heavily in sophisticated risk measurement and management systems only to have them ultimately fail to detect or control risk exposures. Closer to home, businesses in Malaysia are currently facing a set of challenging business conditions and some are likely to find themselves ill-prepared to respond to the challenges, with important implications for their future prospects. So what can we learn about the changing practice of risk management from these experiences? A first observation to my mind concerns the importance of building a strong risk culture supported by governance arrangements that are explicitly aligned to a firm’s risk appetite.