The most effective thing that policymakers and market participants can do in what is a necessarily uncertain world is to work to ensure that the shock absorbers are strong relative to the range of potential economic and financial outcomes. Thank you. 4  BIS Review 49/2007
As a result, markets should work better to reward prudent and profitable performance, and appropriately penalise risky and poor performance. This is positive both for financial stability and the efficient allocation of economic resources. Improving alignment between business units and financial management Bank Negara Malaysia also expects IFRS 17 to be a key catalyst for insurers to review, if not overhaul, business processes across the organisation. This will be driven by at least three factors. First, the need for business units to capture broader and more granular information required for financial reporting. Second, changes in the way performance is measured under the new standard. And third, increased opportunities for institutions to differentiate themselves from the competition, helped by a more integrated view of performance. These considerations will have wide implications for insurers’ organisation structures, data capture, infrastructure and systems, 2/5  BIS central bankers' speeches  risk management, and product design and development. At present, many insurers are operating on multiple, fragmented legacy systems – including largely separate systems supporting the finance, investment and actuarial functions. Systems for regulatory reporting and compliance are also often separate in a number of institutions. As insurers begin to prepare for the reporting of insurance liabilities under the new regime, IFRS 17 will create both a need and the opportunity for insurers to strategically re-think information flows across the organisation – not only to improve efficiencies in financial reporting and mitigate operational risks, but also to capture synergies that will improve business and compliance outcomes.