njuguna ndung ’ u : next generation risk management speaking notes by prof njuguna ndung ’ u, governor of the central bank of kenya, thomson reuters risk management forum “ next generation risk management ”, nairobi, 23 july 2009. * * * distinguished guests ; ladies and gentlemen : it is my distinct pleasure to be joining you this evening at this important forum. i would therefore wish to express my gratitude to thomson reuters, the convenors of this event for the invitation. the timing of the forum is apt in view of the prominence that risk management has gained in financial circles over the last few years. the global financial crisis has only served to underscore the importance of scaling up risk management practices and appropriate pricing of risk to counter dynamics in the global financial markets. i am therefore pleased to see a diverse gathering of financial sector players this evening. thomson reuters also brings a vast repertoire of international experience on risk management that we are keen to draw upon. whereas risk management has been prominent on the radar of financial institutions and markets, the global financial crisis has unearthed serious shortcomings in risk management practices. and furthermore, coming from the centre, this has been disastrous. one of the cardinal causes of the crisis is now widely agreed to be deficiencies in risk assessment and pricing of complex products. these complex products were indeed at the heart of the crisis. markets failed to price these products appropriately and deficiencies in the regulatory architecture precipitated excessive risk taking. it is imperative that market players and regulators reflect on reviewing risk management practices. i am therefore confident that the local experiences to be shared tonight and the international experiences to be gleaned will only serve to enrich this discourse. the central bank, can share the perspectives on risk management from a regulator ’ s viewpoint. the central bank of kenya has over the last five years promoted the inculcation of a risk management culture in the kenyan banking sector. the central bank has also adopted a risk - based supervisory approach. this approach is premised on the overarching objective of proactively addressing threats to financial sector stability. maintaining the stability of the banking sector is indeed one of the core mandates of the central bank. i am pleased to note that the banking sector has, to a reasonable extent, embraced risk management. this is perhaps one of the key reasons behind the relative stability of the kenyan banking sector in the recent past inspite of local and global turbulences. however challenges remain as the kenyan

linah k mohohlo : the challenges faced by developing countries in the current global environment, and how the imf could be reformed to meet these countries'needs speech by ms linah k mohohlo, governor of the bank of botswana, at the 2007 executive directors ’ retreat, international monetary fund, washington dc, 20 june 2007. * * * managing director, mr de rato deputy managing directors, mr kato & mr portugal distinguished executive directors, ladies and gentlemen, it is an honour and privilege that i am in your company this evening. equally important, i am most grateful that i have the opportunity to share some thoughts with you on the challenges faced by developing countries in the current global environment, and on how the international monetary fund could be reformed to meet these countries ’ needs. these subject matters are the core dimensions of your retreat discussions and there should be consensus building emerging at the end of the retreat. since these are broad topics, i can only briefly highlight a few points in view of the time constraint. i should also admit that although the topics have a global perspective, it is inevitable for me to draw on my african and botswana ’ s experience, where i continue to serve in a number of capacities. in sharing my views with you on these matters, i can assure you that none of my remarks are intended to be provocative. however, i am convinced that it is in the best interest of your deliberations that i express my perspective on the issues as candidly as possible. global economic trends i consider the hallmark of my remarks to be opportune for several reasons. this is a time of almost unprecedented increase in global prosperity. world economic growth is not only rapid ( estimated at 5. 4 percent in 2006 ) ; it is also broad - based. in sub - saharan africa, economic growth in 2006 was 5. 5 percent, a trend which is forecast to continue through 2007 and 2008, and has, accordingly, given rise to optimism which borders on euphoria. in fact, some commentators ( non - economists presumably ) have gone as far as to describe the current situation as a “ perfect calm ”. while this expression or description may be more poetic than accurate, it, nevertheless, helps to draw attention to an important point, and that is, if “ perfect calm ” is a correct analogy for “ anti - storm ”, then the favourable current conditions should be regarded as exceptional, which means that they will not continue indefinitely. for this reason,