If a central bank succeeds in attaining credibility so that inflation expectations are stable, there is some scope for also taking into account developments in the real economy. The labour market: an important variable for monetary policy We thus try to conduct our monetary policy so that the inflation target is attained within a reasonable time horizon, at the same time as we emphasize that resource utilisation should approach a “normal” level. However, there is no generally-accepted measure for resource utilisation as there is for inflation. It is therefore necessary to use questionnaires or to try to estimate it using some statistical method. At the Riksbank we use, for instance, “gap analyses”, where we try to relate the current situation and the forecasts for different measures of resource utilisation to the trend for the respective variable. The gap shows how far the variable is from its “normal” level. For instance, we use the deviation in GDP from its trend to study the GDP gap. We have two ways of measuring the gap for the labour market; employment measured as the number of hours worked and measured as the number of persons employed. Developments in the labour market thus have considerable significance for the analysis that precedes the monetary policy decision. However, all of the measures of resource utilisation we present are very uncertain, and this is why we use several different measures. 6 Monetary policy decisions often concern complex deliberations.
In this context, it is worth noting that we are observing adjustments in business models. Some institutions might need to undergo radical transformation, while others need just fine1  https://www.esrb.europa.eu/pub/pdf/other/150625_report_misconduct_risk.en.pdf 3/6  tune their structures. In all cases, we see digitalisation and optimisation of processes, with potential impact on the internal control functions. We also see an increased reliance on outsourcing and an attempt to implement more agile and flexible ways of working. All these trends imply changes that pose additional risks. In this regard, there are some critical elements that banks need to consider in their management of non-financial risk. Let me say a few words about these elements. Starting with IT, I think nobody questions by now that technological change should be part of deeper considerations regarding the sustainability of the banking business model in the long term. If we look at what has happened in recent years in other sectors, there is clearly a need for the banking business model to adapt to a new reality. True, technological adaptation calls in many cases for significant investment in systems to be made. However, such investment today will be key to fostering profitability in the future. A lot of people think that IT change is mainly related to the so-called front-end, namely the customer experience. There is a lot of talk about the interaction with the client and the quality of apps, but I would like to stress that it is even more important to undertake technological change focusing on the back-end processes.