I have already hinted at one relevant factor. The new framework contains explicit incentives to motivate prudent risk management. Banks that qualify to use the more advanced approaches will rely increasingly on their own measures of credit and operational risk exposures when calculating their minimum capital requirements. Because these more advanced approaches will align capital  2  BIS Review 66/2004  requirements more closely with the risks that banks actually face, I expect that banks will seek to develop and improve their risk management processes individually. I would like now to stress the need for an appropriate time horizon, the need to introduce forward-looking approaches, and the importance of avoiding excessive short-termism when assessing risks. It means that risk managers should be very conscious of how risk-drivers change through the cycle and in stress conditions, and incorporate these elements into their decision taking processes. Basel II has been sensitive to these concerns and has incorporated a number of elements such as long-term average calculations, the need to use longer time horizons in the design of internal rating systems and also the need to incorporate stress tests and calculations into downturn conditions. I believe that when risks are correctly assessed, within the appropriate time horizon, and banking systems are adequately capitalised, the financial system as a whole becomes more stable, less sensitive to the ups and downs of the business cycle, and better able to serve as a source of credit and growth to businesses and consumers alike.

The Kijang Emas Scholarship is distinct from the Kijang Scholarship in that the recipients are given the freedom to pursue any field of study at top universities in any country of their choice. The Bank also does not impose any bond on the recipients except that they return, contribute and partake in the development of our nation. To date, 44 high potential talent have been awarded the Kijang Emas Scholarship. The recipients have graduated or are currently pursuing their studies in diverse fields of study including Medicine, Engineering, Law, Economics, Dietetics, Actuarial Science, Accounting, Dentistry, Biochemistry, Genetics, Architecture, Psychology and Geophysics in top universities around the world such as MIT, University of Pennsylvania and the University of Cambridge. Thus far, 11 Kijang Emas scholars have completed their undergraduate studies and have returned to serve the nation, while another seven scholars are expected to complete their studies in the next six months. For the 2015 Kijang Emas Scholarship, we received a total of 212 applications from top SPM students scoring straight A+ for their 2014 SPM. From this, the Bank shortlisted the top 24 students based on their SPM results and also on their level of involvement in co-curricular and sports activities. The students then underwent a rigorous evaluation process under the Bank’s “Kijang Academy” which assessed their technical and leadership competencies, as well as their values. We are pleased to award four outstanding students the Kijang Emas Scholarship this year. Having just completed their SPM, they will be enrolled into the respective pre-university programmes.