A sudden depreciation normally tells us something about the probable future path; it probably reduces the chances that at the end of a given forecast period the krona will have reached the higher rate that an earlier assessment indicated; for one thing, that would require a very much faster appreciation than envisaged earlier. The appraisal of a given appreciation or depreciation depends on what caused it, partly because this may have consequences for its duration and its impact on inflation. A weaker exchange rate accompanied by an economic slowdown need not appreciably change the picture of inflation. A depreciation that is a step in an adjustment to a higher expected rate of inflation is a different matter. An upward shift in inflation expectations in a wide sense affects the picture of inflation directly. Various persistent portfolio adjustments can also give rise to a revision of inflation prospects if the exchange rate is affected more permanently. A further interpretation of a depreciation arises when it occurs in conjunction with generally increased uncertainty in the global financial markets; such a situation usually involves an extensive flight to large currencies and to currencies with a historical record of stability. This source of exchange rate movements is usually temporary. The krona’s weakening early this summer, after the Riksbank had presented the year’s second Inflation Report, was probably due to a combination of slowing export activity, portfolio adjustments and some upward revision of inflation expectations. Current inflation had been notably high in the late spring.

Salience can be achieved by prompting about moral codes—through language that emphasizes words like “moral,” “ethical,” and “good.” Discussions by leaders and key culture carriers—that is, esteemed colleagues regardless of rank in a hierarchy—can also help if they address ethical dilemmas that arise in the course of business decisions. Finally, salience occurs through proximity of decision-makers to those affected by decisions.12 So, look for ways to make the human consequences of choices more apparent. In my view, a habit or culture of considering what is right, and not merely what is permissible, will help any organization attract, retain, and develop high-quality employees. It will promote individual wellbeing and will contribute, over time, to an industry that makes fewer errors of judgment. Do not rest Above all, remember that this is a marathon, not a sprint. So your organization now has three lines of defense—great! But your work is not over. You still have to question whether your organization can be better controlled vis-à-vis its risks. The challenges and opportunities facing your firm do not stop changing. You need to adjust accordingly. I encourage you to ask questions about the three lines of defense model and how it is applied in your organizations. Here is one of the questions on my mind: How do the three lines of defense take account of advances in technology? Technological solutions in financial services are becoming cheaper, faster, more easily available—almost off-the-shelf—and help make your business more efficient and profitable. But do you know how these solutions work?