risk appetite statement should be viewed as a positive and dynamic document which will allow an organisation to demonstrate that deliberate choices are made within a consistent risk framework. in the most effective risk cultures, risk management informs the decisions made throughout the organisation. well defined roles and responsibilities of staff, for risk taking and incident reporting, together with appropriate training, will embed risk culture within the organisation. decision makers must be accountable for their actions, and firms managed accordingly. bis central bankers ’ speeches international focus on risk appetite since the global financial crisis, there has been increased focus on risk management standards and, more specifically, on risk appetite as evidenced by work undertaken by the financial stability board ( fsb ). following a peer review on risk governance, in november 2013 the fsb published “ principles for an effective risk appetite framework ” which sets out key elements for an effective risk appetite framework, an effective risk appetite statement, risk limits, and defining the roles and responsibilities of the board of directors and senior management. the fsb principles are broad enough to allow financial institutions to develop a framework that is tailored to their institution, that reflects their business model and structure, and that can be adapted to changes in the economic and regulatory environment. on the industry side, in 2009 the iif published “ implementing robust risk appetite frameworks to strengthen financial institutions ”, which noted that risk appetite frameworks are an essential tool of risk management and highlighted the need for extensive judgment and challenge on the part of boards and management in this respect. it is the role of board of directors to which i now turn. the role of directors the financial stability board lists in its 2013 principles 12 tasks and responsibilities for the board of directors of financial firms with respect to the risk appetite framework. it starts with the approval of the framework, and ensuring its consistency with business and capital plans, continues with holding management accountable for the identification of risk exposures and for the escalation of breaches in risk limits, and ends with the establishment of internal and external safeguards and assessment of the risk framework. in september 2014 the financial reporting council in the uk published a revised corporate governance code ( “ the code ” ) along with two associated guidance documents. in respect of risk management the code has been amended to require directors to “ confirm in the annual report that they have carried out a robust assessment of the principal risks facing the company, including those that would threaten its business model, future performance, solvency or liquidity ”. it also requires directors to describe those

to the growing voices damning “ globalisation ”. krugman ( 1998 ) has reminded us that keynes saw his interventionist active fiscal proposals as necessary to save the market system. now, changes are needed in international financial markets to safeguard the continuance of international capital flows, with all the benefits they bring.