bank which operates well by any standard may soon find itself boggled with a serious liquidity issue arising from some external shock. if it is unable to raise funds quickly to meet liquidity, it will face a general bank - run forcing it to plead for assistance from other banks, authorities etc. the recent liquidity crunch due to the sub - prime issue is a case in point. it had been reported that one such bank that had faced this liquidity crunch severely had boasted of itself in august that it was indeed a well - run robust bank. to its much embarrassment, just one month later, it had to swallow its pride when it had to plead with authorities for assistance. this points to the fact that the internal auditor has to develop risk assessment and mitigation systems in a bank and take effective measures to give advance warning in the event of an impending risk crisis. the significance of systems and governance principles given the gigantic nature of the risks faced by banks and the inability to foresee the delivery of external shocks, the life of the internal auditor is made miserable today. he has to function as an effective watchdog. but, he does not possess a set of well tested paraphernalia to do this job. he may be an honest, genuine and committed worker. but, the rest in the organization may not be so to the same degree. hence, any mishap can occur without warning or the knowledge of the internal auditor. if it so occurs, the internal auditor himself is driven to a serious quandary. the way to overcome this risk is to develop and place in place suitable and effective systems, processes and methods across the organization at all levels. the internal auditor could just monitor and ensure that the systems are genuinely and effectively followed by all. an important element which also helps him to perform his job effectively is to introduce and follow to the letter the good governance principles in the organization. these governance principles would bind all in the organization by a common code of ethics. the absence of proper governance will lead to misuse of the resources to the detriment of outside stakeholders. the internal auditor cannot keep a watchful eye on everything that happens in a bank. a good deal of discipline that should be inculcated throughout the bank comes from self - discipline and there again, through the strict adherence to governance principles. it is, therefore, in the interest of the internal auditor to promote governance to facilitate his job in a bank. the need for continuous learning these new challenges

is not popular to raise the retirement age. workers have a valid desire to consume some of their increasing productivity in the form of leisure time, or earlier retirement. at the same time, social security and medicare together pose huge financial problems. it is also not popular to raise payroll taxes, or to ration health care. among very unpleasant alternatives, raising the retirement age seems to be one of the fairest approaches across generations. table 3 u. s. workers in physically demanding jobs year percent in demanding jobs 20. 3 13. 8 11. 1 9. 1 7. 8 7. 5 source : eugene steuerle, christopher spiro, and richard w. johnson ( 1999 ), straight talk on social security and retirement policy, the urban institute, august 15. budget savings let's then take a policy change that raises the retirement age three months every two years, or 1. 25 years every decade, and taxes all wages for both social security and medicare. how does it stack up? the tax change is easy to compute. right now about 85 percent of wages are taxable and this coverage rate is slated to decline slightly over time. applying the 12. 4 percent tax rate to the15 percent of wages that are untaxed leads to an effective change based on now - taxable wages and salaries of 2. 1 percentage points. this change more than solves the seventy - five - year social security problem ( for the intermediate assumptions ), and solves more than half of the infinite - horizon social security problem. it is only a first step, but a strong one. increasing the nra by three months every two years would improve the actuarial balance of social security by slightly less than 1 percentage point of taxable wages and salaries. i ignore any costsaving effect on medicare, permitting the early buy - in costs for low - income households to use up any budget savings from higher premiums for high - income households whose primary breadwinner is just over 65. if we were to combine this increase in the retirement age with a few standard measures to improve the horizontal equity of social security - including all newly - hired state and local workers and using a chained price index - the total improvement reaches about 1. 4 percentage points. on net, the changes recommended here might improve the overall balance of social security plus part a of medicare by about 3. 5 percentage points of taxable wages and salaries. these steps alone are enough to finance social security in perpetuity