The essence of the problem is in the highly leveraged and very large hedge fund flows that move around the world rapidly and without any regulation. They are subject to no disclosure rules. They dart from market to market, seizing on weaknesses and contradictions, particularly in the smaller, more malleable markets that are frequently carried away by euphoria or panic. By distorting or manipulating markets in search of profits they are capable of throwing many smaller, vulnerable economies into chaos. They have become, in the words of Ian Macfarlane, the Governor of the Reserve Bank of Australia, “the privileged children of the financial scene, being entitled to the benefits of free markets without any of the responsibilities”. By exploiting the weaknesses of free markets they threaten the very survival of these markets. No small and open jurisdiction can do much on its own to resist their disruptive effects, and their powers for spreading chaos have threatened to disrupt even the strongest economies. In my opinion, no recent case better illustrates this than the dramatic ordeal that we passed through in Hong Kong in the summer of last year. The Hong Kong experience: sound fundamentals threatened by speculative disruptions Hong Kong’s experience over the last eighteen months shows how even a sound economy can be put under severe strain by manipulative attacks from outside.
I am very confident that this Conference will be a great platform to catalyze open discussions among market players on the key issues relating to risk management. It will also provide good opportunities for business networking. On this note, it is my pleasure to declare open the International Risks and Risk Management Conference for Insurance Sector 2010. 4  BIS Review 76/2010