In banking, where risk-based capital standards already exist, MAS is working with the local banks to implement the proposed New Basel Capital Accord. In insurance, securities and futures trading, we are revising the existing disparate capital frameworks, to replace them with a consistent risk-based approach based on common principles and objectives. 2  “Issues in Global Financial Supervision”, Remarks at the 36th SEACEN Governors' Conference in Singapore, 1 June 01. BIS Review 67/2001  5  Effective corporate governance Over time, we should rely more on corporate governance and market discipline to complement prudential regulation and supervision. Good corporate governance is critical to fostering a strong risk management culture and effective internal controls. Going forward, MAS will further raise corporate governance standards, particularly with regards to enhancing the independence of boards and institutionalising professional management. But this must be phased in judiciously. We cannot impose these standards in a vacuum without regard to the institutional and cultural realities in our corporate sector. Effective market discipline Market discipline imposes external incentives on financial institutions to conduct their business in a sound and efficient manner. For market discipline to work, there must be timely and accurate disclosure of relevant information. Investors must be sophisticated enough to make good use of disclosed information, and make considered investment decisions appropriate to their needs and risk appetites. MAS will progressively raise disclosure standards in the financial sector to meet international best practice. Development of the financial industry MAS continues to be charged with the development of Singapore’s financial sector.

There remain significant challenges in tracing how nature loss transmits to the economy and financial sector. Knowledge, data, methods, and models in this area are still largely evolving, even compared to that of climate risks. This report is therefore exploratory, and is meant to contribute towards building a deeper understanding of risks and opportunities in this complex and intricate area. We remain some way from being in a position to develop more explicit supervisory and regulatory expectations – but we believe this work makes an important contribution to our thinking and approach to managing climate and nature-related risks in a coherent manner. Importantly, the financial sector needs to come to grips with the reality that like climate, nature-related risks are already presenting a significant threat to our economies and society that can no longer be ignored. The findings of this report lend impetus to the need to strengthen capacity in this area. The scientific community continues to issue the ‘code red for humanity,’ and with recent events, including the pandemic, floods and bushfires, the message could not be clearer. Ecosystem and planetary health matters to economic and financial stability. While the primary responsibility for addressing these priorities rests with governments, the financial industry and authorities have a critical interest in deepening our understanding and appreciation of the interactions between climate and nature-related risks – because how these risks evolve both affect and are affected by the actions of financial institutions.