When making their risk assessments, the banks test their risk models with a number of different assumptions, including the risk that asset prices which had not previously covaried suddenly completely covary. But the question is then how much these tests can govern actions. It is not certain that they will ultimately be taken sufficiently into account if they appear less reasonable and if considering them entails large costs. 3/5  There are signs that risk exposure has increased in the international financial markets. Several large international banks have increased their risks. The way their risk models are designed, they have been able to increase their exposures to higher risk investments and other types of asset without increasing the total risk measured, partly as a result of low interest rates. Financial institutions have increased their investments in high-risk bonds, in various commodities and in various types of credit derivatives. The question is whether the banks’ opportunities to sell certain risks entail their risks actually being reduced, or whether they have increased as a result of their retaining the highest, most complicated risks. The banks probably have more volatile risks in their balance sheets. The balance sheets are shrinking, but the risks are larger, calculated as a percentage. The question is what it entails when the banks sell their risks, primarily credit risks. Risks can be compared to energy, or heat. They do not disappear into thin air; they are always there somewhere.

This pact reasserts the commitment of the government to good governance and it sets out a number of activities to be pursued through July 2007 in ten key areas. These include efforts related to: free and fair elections, anti-corruption, anti-money laundering, procurement, the Office of the AuditorGeneral, civil service reform, decentralisation and the role of non-state actors (notably the private sector and civil society), the creation of a more conducive investment environment, implementation of the extractive industries transparency initiative and better public service delivery in health and education. The Pact also commits the four budget support donors to further harmonisation around the government’s programme”. Enforcement of the governance agenda is consequently exercised by the donor community through inclusion of governance requirements in the programmes of assistance agreed with the country; establishing them as conditionalities and trigger requirements for release of funds; providing technical assistance to ensure the performance of these elements of the programme, including provision of personnel in some cases. We may note in passing that action on all these requirements is in progress and the related programmes are in varying stages of implementation. Civil society is also becoming increasingly important in trying to put pressure on government to deliver on governance issues. In the Sierra Leone context, special mention may be made of the Campaign for Good Governance, the Civil Societies Organisation, the 50/50 Group, the Lawyers Centre for Legal Assistance (LAWCLA) and other bodies. A recently established chapter of the Institute of Directors pays particular attention to the improvement of corporate governance.