In some instances, the board and management will also have to deal with increased and sometimes conflicting regulatory and 2  BIS central bankers’ speeches  legal requirements across the different jurisdictions. For such financial groups, the lines of accountability and reporting must be clearly established to avoid the business becoming “toobig-to-manage”. A more diverse board reflecting the financial group’s cross border presence might also be necessary. As the operating environment becomes more complex, it is not an impossibility that sometime in the near future there would be a demand for “professional directors”. Secondly, financial innovation, including in the area of Islamic finance, will continue to expand as institutions seek their own competitive edge. While we should encourage such innovations within the bounds of prudence, the implication of financial innovations on governance arrangements and practices must be properly understood. For example, the introduction of new financing structures based on different Islamic contracts such as equitybased or risk-sharing concepts will likely demand different and more robust governance arrangements. In this context, the Bank is introducing Shariah and operational standards to promote greater legal and operational certainty and quality in Islamic finance transactions. These standards will set out, among others, clear duties and responsibilities of the various parties involved in Islamic contracts with the aim to ensure end-to-end Shariah compliance. At the same time, there will be enhanced disclosure requirements on risks associated with potential misconduct and negligence.
This will supplement the role of existing disclosure requirements which help investors assess the financial condition and risk profile of financial institutions. Conclusion It is my hope that as we venture into the future, this workshop will steer a dialogue towards developing a deeper understanding of the contemporary issues that confront the industry and yield new perspectives and insights around governance issues. Programmes such as this make an important contribution to that process. On that note, I wish you a productive and engaging workshop. BIS central bankers’ speeches  5