The Malaysian insurance sector is also fortunate that the global insurance sector has also, to a certain extent, been insulated from the worst aspects of the global crisis. The above not withstanding, we must always bear in mind that as institutions grow bigger and become more complex, they are more vulnerable to contagion risks and spill-over effects. A pertinent example is that of the American International Group (AIG). AIG suffered a liquidity crisis when its credit ratings were downgraded due to the mounting losses arising from its Financial Products division during the sub-prime crisis beginning in 2008. More recently, the European Union faced one of its gravest crisis as Greece’s ballooning sovereign debts spiraled and threatened to unravel both the European Union and the Euro currency. What are the lessons from these examples? A fundamental point is to realize that the financial world is now a web of risks, with complex inter-linkages between different financial markets and sectors. The highly contagious effects of a failure of a single entity in one part of the world on all other connected parties illustrate the tremendous importance of sound and effective risk management in today’s financial world. Due to the inter-connected economies around the world, Asia has not been isolated from the spill-over effects of the global financial crisis. The Western economies continued to be bogged down by slow and hesitant recovery with weak economic growth and high unemployment rates. Emerging economies, particularly in Asia, however, have been resilient through these financial challenges.

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.