IOSCO could play a constructive role in coordinating such mandates and in any event, the current iterative process of disclosure, reaction and adjustment will be critical to ensure that these eventual market standards are as comparable, efficient and effective as possible. Second, risk analysis The second step on the path to a new horizon is better climate change risk management. Climate change creates both physical and transition risks.7 Physical risks arise from the increased frequency and severity of climate- and weather-related events that damage property and disrupt trade. Transition risks result from the adjustment towards a lower-carbon economy. Changes in policies, technologies and physical risks will prompt a reassessment of the value of a large range of assets as costs and opportunities become apparent. The longer meaningful adjustment is delayed, the more transition risks will rise. Climate risks also have a number of distinctive elements, which, in combination, require a strategic approach. These include their:   Breadth, as climate risks affect multiple lines of business, sectors and geographies;    Magnitude, as the full impacts of climate risks are large, potentially non-linear and irreversible;    Foreseeable nature;  6  For example the Oil and Gas industry group convened by the World Business Council on Sustainable Development and the Institute of International Finance for banks. 7 The other channel concerns liability risks. These stem from parties who have suffered loss from the effects of climate change seeking compensation from those they hold responsible.

Mohd Razif bin Abd Kadir: Islamic finance and the collaboration between Malaysia and Bahrain Special remarks by Mr Mohd Razif bin Abd Kadir, Deputy Governor of the Central Bank of Malaysia, at the Signing Ceremony of Memorandum of Understanding between Bursa Malaysia – Bahrain Financial Exchange, Manama, 24 January 2010. *  *  *  It is my great pleasure to be here today on this occasion of the signing ceremony of the Memorandum of Understanding between Bursa Malaysia Berhad and the Bahrain Financial Exchange. The signing we are about to witness today will lay the foundation for the collaboration by the two exchanges on Bursa Suq Al-Sila’. I wish to thank the two exchanges for inviting me to give some remarks at this auspicious occasion. I also wish to applaud this commendable effort by the two exchanges which marks another important milestone in the development of the global Islamic financial services industry and in bridging further our two countries. Maintaining the stability of Islamic financial system This effort takes place at a time when the global economy is entering into a period of improved international economic and financial conditions. The global financial crisis has highlighted several structural weaknesses and drawbacks in the international financial system. While Islamic finance is not insulated from the effects of the current environment, the Shariah principles and values that are inherent in Islamic finance provide an important underlying foundation. The Islamic financial system has continued, during this period, to become increasingly integrated with the international financial system.