The top level management is responsible for putting in place a well-defined risk governance framework and formulating the appropriate risk strategies. At the operational level, the roles of the business units are to ensure that key risks are appropriately identified, assessed and mitigated. We are all aware, therefore, that risk management is a dynamic and iterative process. Risk management is not a one-off exercise. Instead, it is a continuous cycle. Hence, there should be genuine awareness, ownership and accountability of risks throughout the company. Every employee should see himself or herself as a risk manager! It is exciting to see the breath of the topics for this Conference. And it is even more encouraging to see risk experts from different countries like the United Kingdom, Hong Kong, Singapore, Philippines and Malaysia coming together to exchange information and experience. I am also pleased to note that some of the discussions will cover the Takaful perspective. This will include discussions on the impact of Shariah requirements, as well as sessions on financial management and business continuity management for Takaful business. In closing, let us remind ourselves again that risk management is a corporate culture and everyone plays a role in the process. Your roles are critical in ensuring that the key risks, both present and foreseeable, are identified and effectively mitigated. With concerted efforts from all parties, an effective risk management process will enable companies to minimise financial losses, and optimize business practices, in order to respond to the changing business environment.

As Malaysia moves into the next stage of economic development, by transforming from a mainly production-based economy to a more innovation-driven and knowledge-based economy, the financial services sector will play a prominent role in this evolution. In support of this transformation, Bank Negara Malaysia is developing a new blueprint for the financial services sector. This blueprint will chart the next phase of the development of the financial sector, position the financial sector as one of the main catalysts for the transformation of the Malaysian economy and ensure our economy remains robust and resilient to respond to any emerging risks. Risk management for insurance institutions It is expected that the financial sector in Malaysia will expand and become more complex and inter-connected over time. Therefore, the corporate governance and risk management practices in insurance institutions will also need to evolve to keep pace with the fastchanging environment. It is a fact that institutions which performed better during the crisis were consistently differentiated by more robust governance and risk management practices. According to a recent Towers Perrin survey of major U.S. corporations, failure in risk management has been cited to be the key characteristic of financial institutions that suffered large losses during the global financial crisis. Thus, improving risk management was the top priority of CFOs in reaction to the global financial crisis. Prioritizing risk management is even more important for insurance companies. This is due to the fact the core activity of insurance involves risk-taking and risk-transfer, and that insurance risks are usually long-tailed.