Opening remarks by Gerardo Esquivel Hernández, Deputy Governor of
Banco de México, on the occasion of the 16th Annual Conference of the
International Operational Risk Working Group (IORWG)
Mexico City, September 20, 2022
Good morning, good afternoon, good evening, everyone.
On behalf of Banco de México, I am pleased to welcome you to the 16th
Annual Conference of the International Operational Risk Working Group
(IORWG), hosted by Banco de México, and jointly organized along with
Banco de España and the Federal Reserve Bank of Philadelphia.
This event takes place in a context in which the COVID-19 pandemic has
tested the resilience of countries and institutions, including central
banks. We have faced unprecedented challenges to achieve an extremely
difficult balance between different objectives: maintaining the continuity
of central banks' operations, prioritizing the health of the staff, and
making sure that central banks are able to fully perform their functions
and attain their objectives and purposes.
Although central banks already had operational continuity strategies,
most of them were not entirely prepared for the type of contingency we
experienced during the pandemic. However, the mere existence of these
strategies was a key element that helped us to rapidly find new ways to
perform and maintain operations. In fact, the pandemic contingency
transformed our institutions into even more resilient organizations,
capable of coping with adverse scenarios, by developing prevention,
response, adaptation, recovery, and learning mechanisms. The degree of
commitment and responsibility that we have with our institutions, which
is a fundamental pillar of financial stability in our countries, was truly
brought out during this emergency.
In terms of resilience, we rapidly adapted our work schemes and
transitioned to a general remote work setting which, in the case of Banco
de México, had only been implemented as a business continuity strategy
for critical processes and in very specific areas. By doing so, we confirmed
that the central bank staff is the most important and valuable asset of the
institution. Its capabilities, solidarity, adaptability, and flexibility were key
elements in getting through the pandemic, and contributed decisively to
fulfill the mission of our institution uninterruptedly. The lessons learned
from what we have undergone over the last two years will certainly
strengthen us as central banks. We must now adjust to the challenges
that this new environment imposes on us.
We are now moving from a world of face-to-face interaction to a hybrid
reality that has allowed us to broaden the possibilities and carry out this
first hybrid IORWG conference in which both those physically present and
those connected from a distance will be able to actively participate and
exchange experiences. On this occasion, we are joined by 100
representatives from 71 central banks and other international financial
organizations from five different continents; 56 of them will participate
on site, while 44 will do it remotely.
This conference has a very versatile program. A series of sessions will
address various topics such as cybersecurity risks, business continuity,
top operating and emerging risks, incident reporting, risk appetite, risk
culture, and key risk indicators. They will also cover issues such as Central
Bank Digital Currency (CBDC), cloud services in the context of vendor risk
management framework, and the review of maturity models and best
practices.
This broad program reflects how central bank non-financial risk
management has evolved from a purely operational perspective to a wide
and multidimensional vision that permeates the entire institution and
gains increasingly more importance. It has now become a complex set of
issues that encompasses a diversity of risks ranging from traditional
operational risks to highly specialized risks such as those involving
cybersecurity, business continuity, strategic areas, and even risks arising
from third parties, among others. All these issues have a subtle and at the
same time complex connection that must be identified first, to be
effectively managed.
In this task, it is important to strengthen the governance model to handle
the constant challenges faced by central banks and to be able to
communicate risk-related issues to the top management in an effective
way. In this regard, it is essential to have well-defined responsibilities and
to ingrain in the entire organization the conviction that everyone in our
institutions is a key element in managing and mitigating risk exposure. In
this endeavor, it is relevant to continue fostering a risk culture
throughout the institution.
For this reason, it is imperative to have a clear view of the ever-changing
context that central banks face and be ready to identify threats,
vulnerabilities, as well as their interconnections, to be better prepared to
prevent and to preemptively address these risks and mitigate their
impact.
Hence the importance of having working groups and foster collaborative
spaces where central banks can exchange their experiences, provide
relevant information to identify trends, and propose solutions to the new
challenges they face.
Since its foundation in 2006, the International Operational Risk Working
Group (IORWG) has facilitated spaces for close cooperation and
coordination within the central banking community, continually
strengthening and providing opportunities for our respective institutions,
in order to share their best practices, implementation experiences, and
novel proposals, to address the issues that emerge in this dynamic,
evolving and challenging risk environment.
For us, at Banco de México, it is a privilege to be part of the International
Operational Risk Working Group (IORWG) and I am sure that during these
three days of work, in this space and platform, countless ideas and
strategies will arise that will allow us to expand our vision to successfully
address the challenges that we are all facing.
Once again, I welcome you all to Banco de México and I thank you in
advance for your valuable contributions to these topics of interest to all
of us.