According to the IMF’s World Economic Outlook, global growth was projected at 4.8 percent in 2010 with Asia and Latin America experiencing strong growth. Africa was also expected to experience robust growth, but growth in Europe was sluggish whilst in the United States, it remained subdued. BIS central bankers’ speeches  1  This uneven scenario in global growth has created several downside risks, including risks to the financial sector. There is no guarantee that the problems in the financial sector have been adequately addressed, but there have been concerted efforts to ensure that they do not recur. The introduction of new rules, in particular Basel III is expected to help in this direction, as Basel III will address issues including strengthening risk coverage of capital for banks, the buildup of capital buffers and the introduction of global minimum liquidity standards. However, countries are now realizing that in addition to these new rules there is the need for better supervision and the creation of crisis resolution mechanisms. Your Excellency, distinguished guests, despite the down side risks to the global economy, there is room for optimism which stems from the progress being made to repair and reform the financial sector, including developing macro prudential approaches to limit systemic risks. Monetary policy in the developed economies should remain accommodative in order to serve as the first line of defense in the event of a future shock.
Sound and robust risk data aggregation capabilities and risk reporting practices have become even more important since the global financial crisis, which demonstrated that an institution’s ability to manage risk-related data has a significant impact on its overall risk profile and the sustainability of its business model, especially under stress conditions. The presence of board members with IT expertise has increased significantly in banks, allowing them to be more aware of this shortcoming and to make better-informed decisions to implement an effective RDAR framework across the institution. Additionally, some institutions have invested in strengthening their processes, by including dynamic dashboards in risk reports, which allow for a deeper dive into several types of risk. In conclusion, although it has been in the supervisory spotlight for several years, awareness of the benefits of good risk data management has shown limited progress in institutions. Thus, the accuracy and timeliness of internal reporting still needs to be improved, as not doing so will limit management bodies’ ability to make the right strategic decisions. Conclusion The board’s oversight role is one of the core elements of good governance. Adequate skills, challenge and independence are three factors that ensure good governance of our institutions, and it is therefore helpful if both their business model and their risk management are geared towards making them robust and profitable. 5