it has been widely adopted in a number of fields and proven to be successful. the tool however is a double edged knife and the financial sector has vindicated such a conviction. 5. one of the causes of the subprime bubble is the pay structure adopted by financial institutions in launching subprime products. during the subprime cycle, most financial institutions pursued a compensation scheme which gave incentives to all personnel involved in the subprime products to chase after high income through risky trading, launching risky products that generally provided higher rates of return. bonus payments for successful and senior investment bankers, including those in the business holding subprime positions, were very substantial. essentially, bonuses were measured against gross revenue after personnel costs, with no formal account taken of the quality or sustainability of those earnings. we have to admit that greed is part of our human nature. in the face of profit, quality of product and hence the revenue derived therefrom could be compromised. the phenomenon was common among institutions and staff involved in the subprime trade, from top management, originators, agents to traders. 6. all enterprises, not confined to financial institutions, should learn from this lesson that, to maintain the sustainable growth of an entity, all compensation schemes should in future adequately reflect performance in the medium and long term as well. as a matter of fact, the compensation schemes for staff involved in the subprime bubble all had a common feature in that there were enormous rewards for deals but there was also a failure to impose penalty symmetrically when losses occurred. to put it in a nutshell, a viable compensation scheme should be well structured and be geared to the long term corporate target and strategy rather than short term profit. 7. i hope my opening remarks on risk management and compensation management will kick off a series of discussions on management of other facets of business. experts and seasoned practitioners from different trades are going to share with us their views, experience and insights to resonate with today ’ s theme “ navigating complex challenges through corporate strategies ”. i am sure the conclusions of this conference will enable the attendees to formulate the correct corporate strategies to navigate through uncharted waters of the contemporary global economy. finally, please accept my best wishes for a huge success of this visionary conference. thank you.

services office of the municipal government of shanghai in 2012, the “ 1st financial cooperation meeting between shanghai and macao ” took place in shanghai in 2013. during the meeting, consensus on various issues was reached and expected results were achieved, including the proper use of macao as a trade and commerce platform between mainland china and portuguese - speaking countries ( pscs ). as far as we recognise, the msar financial sector has entered into a stage where opportunities are abundant. in the current situation, i believe that the local financial sector should look at it from a broader perspective, think more innovatively, make full use of various policy initiatives, try actively and seize the opportunities. on the basis of maintaining a reasonably prudent balance between business development and risk management, the local financial sector could reach new highs in the future, while making greater contribution to appropriate economic diversification. bis central bankers ’ speeches finally, on behalf of the amcm, i wish the msar continuous prosperity and stability, macao ’ s financial sector steady development, everyone a prosperous year of the horse, good health and a happy family! thank you very much! bis central bankers ’ speeches