tools of supervisory and statistical data we revise our fitness and probity regulations and our internal workflow around same. we support the department of finance in its drafting of transposing legislation. in so doing, the establishment of the ssm provides us with the opportunity to improve and strengthen our tools and procedures so that we can be an even better supervisor. our aim is not only to ensure that we will have completed all preparatory tasks in support of the ecb ’ s bis central bankers ’ speeches preparations but also to make the necessary organisational changes to allow us to deliver on our supervisory mandate ever more effectively. in doing so we seek to ensure that we are giving full expression to the aims and objectives of the ssm – not the mere implementation of the minimum required to be compliant with ssm methodologies and structures. but of course, we cannot do this in isolation. we have recently had the pleasure of hosting a series of visits by senior management of the ssm in recent weeks, and we are also looking forward to the visit of daniele this afternoon. in april, we were visited by dr korbinian ibel who is the director general in charge of dg iv of the ssm, which, among other tasks, is in charge of developing the ssm policies and methodologies and ensuring that all national supervisory authorities apply the ssm rules and procedures consistently, for significant and less significant institutions alike. we held a series of meetings with colleagues from different divisions, including our risk division. our risk based approach to supervision which was introduced by the central bank in 2011 has been considered in detail when devising the ssm approach of judgment based, forward looking supervision that daniele has described. as she already indicated, the system which will be used by the ssm will be based on the prism system that we currently use. this software will be adapted to the ssm methodology. more recently, in early june, we welcomed stefan walter and ramon quintana, directors general of dg i and dg ii of the ssm, with their deputies, for another fruitful day of meetings and engagement which some of you will recall being involved in. this afternoon, we will introduce daniele to the banking supervision team and also to the wider project team which includes colleagues from a variety of divisions including our policy and risk divisions, hr, it, statistics, enforcement and legal. we will host a town hall style meeting with all staff affected by the changes brought about by ssm

1 the sector needs to reflect carefully on its strategic response to a prolonged low interest rate environment. for instance, for those firms within the life sector that have traditionally included guaranteed returns to policyholders, there is clearly a challenge to this business model. in terms of replacing that business or earning returns to support legacy guarantees, it may be tempting to seek returns from nontraditional and non - insurance activities. however, this strategy has clearly been a source of fragility for firms in the past. for non - life insurance, buoyant investment returns have subsidised the pricing of core insurance products. the response to a lower - yield environment should not be to chase returns by investing in ever riskier assets. rather, the focus should be on earning an appropriate return from core underwriting activity. there is much in the new solvency ii framework that should allow firms to better manage risks associated with the low interest rate environment. in particular, the own risk and solvency assessment ( orsa ) process should provide a framework for enhanced corporate understanding of interest rate and investment risks. for regulators, understanding how the insurance sector is likely to be affected by a prolonged low interest rate environment is also a priority. indeed, the risk posed by the low interest rate environment is the core scenario that is contained within this year ’ s eiopa stress test. finally, i note that there is also a panel session on the global economic shift towards emerging economies. judging by the disparity in insurance penetration rates, there appears to be significant medium - term growth opportunities in emerging economies. to the extent that the global growth in the insurance sector is partly served by an expansion in the international activities of european insurance firms, the scope for scale economies and diversification need to be balanced by appropriate management of some key risk factors. these include : the limits of managerial control over wide geographic spans ; the complexities of local tax, social security and legal systems ; and the correlations between underwriting returns in a given region and other exposures such as the performance of various asset the implications of climate risk for the insurance sector is another prominent topic. i do not address this issue today. bis central bankers ’ speeches classes and the sources of equity and debt funding. the insurance sector can learn much from the storied history of international banking in negotiating the opportunities and pitfalls associated with financial globalisation. bis central bankers ’ speeches