The challenge lies in specifying a model that fits together seamlessly with other  4  BIS Review 34/2004  international accounting guidelines and at the same time aligns well with sound insurance risk management and supervisory objectives. Given some of the issues we’ve faced in other areas of accounting, that seems unlikely to be a quick or easy job. That same challenge to align accounting guidelines to sound risk management objectives as well as supervisory objectives exists across the financial services sectors. It explains why financial supervisors, and especially the Basel Committee, attach great importance to playing an active role in the international debates on accounting. In the Basel Committee’s case, we seek to represent the supervisory perspective on key accounting issues relevant to banking, and we support the work underway in the accounting profession towards convergence in accounting standards globally. With regard to Basel II, the Committee worked closely with our colleagues in the International Accounting Standards Board to avoid conflicts between Pillar 3 and the broader accounting standards. In fact, the Committee views Pillar 3 as a further refinement of the accounting standards that apply to banks’ specific exposures. Because we recognise that we have much to do in this area, we will continue to monitor accounting and market developments in the light of Pillar 3. Our dialogue with accounting standards-setting bodies and the accounting profession will continue to grow in the years to come.
I should add that the International Association of Insurance Supervisors (IAIS), a fellow association of supervisors in the insurance area, is now discussing a supervisory framework that would apply to all insurance regulatory systems globally. Evolution in risk management and the reform of financial supervision should complement and reinforce each other, and the progress in each area will be influenced by the work underway globally to revise accounting guidelines. The Geneva Association has taken a great interest in this topic, so I will conclude my remarks with some brief thoughts from my perspective on the convergence of accounting standards, advances in risk management, and supervision. II. Trends across financial services sector  Allow me to begin with an overview of recent trends in risk management. Last year, a body representing major financial supervisory agencies conducted a study of 31 banks, securities firms, and insurance companies in 12 jurisdictions. This body - called the “Joint Forum” - consists of expert supervisors from member agencies of the Basel Committee, the International Organisation of  BIS Review 34/2004  1  Securities Commissioners (IOSCO), and the IAIS. The Joint Forum seeks to identify best practices and develop guidance for activities across the financial services sector. In its report, which was published in August 2003, the Joint Forum identified two important and recent trends among large, complex firms engaged in banking, securities, or insurance, or in some mix of these activities. A. Integration of the risk management function.