past 10 years there has been an average of one shock every year starting from the gulf war in 1991 to the latin american crisis of the early nineties and so on down to the asian economic crisis in 1997, the russian bond default crisis in ’ 98 and most recently last month, argentina ’ s default. the causes of these stress events are wide - ranging. in addition, these shocks have shown a greater tendency to spread rapidly to other financial markets. the rapidity with which the asian crisis spread across east asia in ’ 97 - ’ 98 is a good example. many of us here today may wish that we have the ability to predict with certainty when the next crisis will strike. it is, however, far more fruitful to adequately prepare ourselves for the inevitable. and that, in short, means enhancing our risk management capability. risk management initiatives in singapore mas will introduce three risk management initiatives to help financial institutions in singapore better manage the challenges ahead. the first initiative is a mas guideline that aims to help banks prepare themselves to meet the ill effects of financial crises and shocks. one of the ” defining ” features of a financial crisis is that it strikes suddenly and once it has struck, it gives very little time for financial market participants to react. how then can we better prepare ourselves for a crisis? stress testing offers financial institutions a systematic methodology to prepare for financial crises. stress testing is based on the old military saying, “ the more you sweat in peace the less you bleed in war ”. that is, financial institutions that have a comprehensive programme to stress test their portfolios will be better prepared when a stress event occurs. stress testing consists of assessing the attributes of a portfolio, assessing the scenarios that are likely to occur and calculating the stress loss should a crisis come to pass. with a rigorous stress - testing programme, a bank can alter the composition of its portfolio, if preset stress loss limits are exceeded during stress tests, thereby limiting its losses should a stressful event actually occur. stress tests are fairly common for market portfolios but are still not widely used to assess stress loss of credit portfolios, particularly, loan portfolios. we are releasing on our website today a consultative paper on credit portfolio stress testing. the paper will be further developed with your inputs before we release it as a formal mas guideline. we invite you to send in your comments by may 2002. in the coming months, financial institutions in singapore can also expect to receive the mas risk management guidelines for market risk,

and to have any inaccurate information corrected. any dispute resolution process should be timely and effective, and should also be covered in the consumer banking code that abs is currently working on. second, it is also important that individual privacy is respected and customer data are not misused for purposes other than what they were originally intended for. a good starting point is the principle of reciprocity on data usage, which all participating members to the bureau will need to adhere to. high standards of confidentiality is also expected of both the bureau operators and participating members. the abs will continue to work with mas to ensure that these principles are observed. the launch of the consumer credit bureau will mark the beginning of a new risk management process in singapore. it will further bolster the integrity and transparency of singapore ’ s financial sector. apart from ensuring that our regulatory framework is progressive and our infrastructure is world class, mas is also taking an active approach to promoting industry best practices in risk management. the guidelines that we have introduced are steps in this direction. this risk conference is another such initiative. the objective of organising such a conference is to highlight emerging fields in risk management by bringing together risk practitioners and academics, to share their experiences and exchange ideas. such a forum will help the industry and regulators keep abreast of the latest developments in financial risk management i hope you will find this first risk conference that mas has organised useful and fruitful. thank you.