Tarisa Watanagase: Supervisory concerns in an IT environment Speech by Dr Tarisa Watanagase, Deputy Governor of the Bank of Thailand, at the 2nd SEACEN/ Federal Reserve System Course on Electronic Banking and Technology Risk Supervision, Bangkok, 12 May 2005. *  *  *  Financial institutions increasingly rely on technology to do their businesses, as a result, improper management and operation of IT will bring risks to financial institutions. Also, issues associated with IT including technological changes, new threats and vulnerabilities will no doubt affect financial institutions' performance and risk profile. Therefore, it is necessary to integrate IT risks with risk-based supervision in order to obtain a comprehensive risk profile of a financial institution. Today is a good opportunity for me to share with you our thoughts and experiences on Supervisory Concerns in an IT Environment. 1. Overview of current IT environment in the banking sector    The Thai financial institutions have been using IT in their businesses for decades. Initially, IT was used as a supporting tool for banking operations, helping staff do their work faster, more conveniently and with less human errors. Then, along with more advanced technology, many financial institutions now offer their products and services through electronic channels such as internet banking, mobile banking, ATM, etc. These alternative banking channels provide customers much easier and more time-saving ways to do their transactions with banks.   In addition to offering alternative banking channels, financial institutions currently also take advantage of IT to innovate financial products and services.

So this is an extraordinary time for the world financial market and probably most suitable for an international symposium on the subject of financial globalization. Ladies and Gentlemen, Financial globalization has certainly made the international financial landscape look very different today compared to just a decade ago. And almost every day, new events continue to re-shape it even further. One aspect among these changes, however, remains constant. That is, despite the complexity and sophistication of today's financial institutions as well as instruments that are developed to manage all kinds of risks, the remarkable degree of global financial linkage still makes financial turmoil transmit from one country to another at an ever faster pace than we have previously anticipated. Like all financial crises of the recent past, several weaknesses and excesses were initially submerged and only later found to be much larger than the initial estimates, contributing to the permanent boom-bust cycle that seems to always accompany modern business and finance. Understanding the various causes of the crises is only the initial step towards resolving its short-term impacts and preventing its recurrence, if entirely possible, in the longer-term. In the meantime, we will probably continue to have to witness an intensification of the financial crisis. As mortgage-related assets deteriorate further, economic growth will inevitably slow down even more, along with the downside risks of financial and the economic outlook.