they may not be paying close enough attention to the aggregation of their exposures or concentrations that arise in the resulting portfolios of business. also, rapid growth can place considerable pressure on an organization's management information systems, change - management controls, strategic planning, credit concentrations, and asset / liability management, among other areas. many of the companies that have attracted public attention in recent years due to serious breaks in controls failed to focus on process changes and critical investments in their risk management and control systems that were needed to successfully support their business plans. an organization must also understand how its various business components dynamically interact. a successful enterprise - wide risk management process can help to meet many of these challenges. at the same time, it is clear that risk management practices need to be applied in a manner appropriate to the size and complexity of the organization. while the leading - edge risk - management practices used at the largest, most complex banks may have some applicability at smaller, less complex banks, data and cost limitations require greater use of more generalized models and the use of outsourcing to supplement the knowledge base of the institution. and as most of you know, running a smaller or less complex bank presents different types of challenges and requires a risk - management framework appropriately tailored to the institution. for example, transactions may be conducted more on a relationship basis and may be less data - intensive. in such a case, bank management needs to develop risk - management tools that allow it to ensure that risks are still being appropriately addressed. further, smaller organizations often face a challenge of ensuring independent review of processes and decisions since officers and staff often have multiple responsibilities that can present conflicts of interest. many of you are probably familiar with the enterprise risk management framework published over a year ago by the committee of sponsoring organizations of the treadway commission, or coso. the coso framework provides a useful way to look at enterprise risk management. notably, the coso framework states explicitly that, while its components will not function identically in every entity, its principles should apply to institutions of all sizes. small and mid - size entities, for example, may choose to apply the framework on a less - formal and less - structured basis and scale it to their own needs - - as long as quality is maintained. this underscores the message from bank supervisors that good risk management is expected of every institution, regardless of size or sophistication. naturally, some tension will still exist between what supervisors expect and how bankers

thus align adjustment processes across countries. in fact, recent research on the intra - euro area impact of structural reforms shows that the variance of the responses of national outputs to an interest rate tightening would be – at the peak and after the implementation of such reforms – roughly one - sixth of the level that it achieves in conditions of cross - country heterogeneity in terms of price and wage rigidity. 2 3. key features of past productivity growth when comparing the euro area ’ s economic performance with that of the us over the longer term, there is evidence of clear underperformance in output growth. since 1995, the annual growth rate for the euro area has averaged 2. 2 % per year compared with 3. 1 % in the us. one of the main reasons for the euro area ’ s disappointing performance is the low trend growth in labour productivity. between 1980 and 1995, hourly labour productivity in the euro area grew on average by 2. 3 %, and between 1995 and 2007, it grew by only 1. 3 %. in the us over the same periods, the figure went from 1. 2 % to 2. 1 %. 3 understanding developments in services is crucial to our understanding of developments in the economy as a whole. services account for 69 % of the euro area economy and 70 % of total employment. 4 private sector services represent roughly half of the economy, and government - related services make up the rest. and it ’ s the private sector services that mainly account for the gap in labour productivity growth between the euro area and the us. from 1995 to 2005 their hourly labour productivity in the euro area only grew by 1. 0 % compared with 2. 9 % in the us. of the private sector services, distribution services, including the these results are obtained using a multi - country dsge model of the euro area, which is calibrated to the three largest member states, namely france, germany and italy. structural reforms were simulated by reducing the degree of price and wage rigidity and sectoral mark - ups to the lowest level prevailing in the euro area. see altissimo, f., t. blattner and s. siviero ( 2008 ). “ a multi - country dsge model of the euro area : lessons for structural policies ”, forthcoming. figures at the sectoral level are from euklems database and are not fully comparable with figures for the whole economy mentioned earlier in the speech. eu klems database.