Remember that your personal liability, will also be at stake in case of failure and such loss can be quite substantial if you have not taken the right steps. So, take the interest; take the time to study, and, be diligent in your activities. Actually, if you do that, you will find that it is much better for your Company, much safer for yourself, much easier for the regulator, and much easier for the market. My dear friends, risk can be a sudden occurrence. Risk can, at the same time, be slow in coming. You don’t know which risk is there, but you have to be alive to risk. Today, management is all about risk management. What are the risks in doing something? What will be the repercussions? What will be the dangers? You have to think-safety first, just like how it is said at some of the modern construction sites. When you go to some construction sites, you see a large sign that says “safety first”. Why? Because you have to survive before you are able to construct, and accidents can be both painful and costly. In looking at safety, in the case of financial institutions, the important factor is to focus on liquidity management. You may be profitable. You may be having a very good plan for the future. But if you do not have liquidity, i.e., if you do not have cash to meet your obligations, you cannot survive. It is like a very fit athlete who can run very fast.
But, if the athlete cannot breathe for some reason, he will soon be dead notwithstanding his fitness. Your liquidity, or your cash inflows and cash outflows is also like breathing in and out. These cash flows have to be monitored very carefully. Liquidity management has to be practised diligently. The board members of finance companies must also learn and appreciate the principle of liquidity management. Don't think that it can only be left to the executives of the company. In the final analysis, the executives may not even be responsible in a legal sense. The legal responsibility will rest with you! BIS Review 55/2008  3  I am sure the other speakers will expand on all these aspects that I touched upon. So, I will now conclude with a few overall thoughts. My dear friends, take your responsibilities as Directors very seriously. Keep abreast of what is happening. Keep abreast of the markets. Keep abreast of the risks that are taking place, both globally and locally. Watch the world and environment carefully. Be alive to new techniques. Take the interest to do all that, because if you do, then we can all have a healthy market. That is what we at the Central Bank, are hoping you would discharge your responsibilities diligently. The last thing we would like to do is to call you up and to say that your business is not run properly. We don’t want to do that.