. 13 for a “ multiple roles ” perspective of risk managers, see matthew hall, anette mikes, and yuval millo, “ how do risk managers become influential? a field study of toolmaking and expertise in two financial institutions, ” april 2012. also, see, ben w. heineman jr., the inside counsel revolution : resolving the partner - guardian tension, 2016, american bar association. 14 board of governors of the federal reserve system, division of supervision and regulation, “ sr 20 - 24 : interagency paper on sound practices to strengthen operational resilience, ” november 2020. also, see striving for operational resilience : the questions boards and senior management should ask, ” oliver wyman, 2019. 15 basel committee on banking supervision, “ revisions to the principles for the sound management of operational risk, ” march 2021. 16 nathan furr, andrew shipilov, didier rouillard, and antoine hemon - laurens, “ the 4 pillars of successful digital transformations, ” harvard business review, january 2022. 17 bank for international settlements, “ cyber - resilience : range of practices, ” december 2018. by continuing to use our site, you agree to our terms of use and privacy statement. you can learn more about how we use cookies by reviewing our privacy statement.

on these terms going forward, that would not make it prudent for the u. s. to continue borrowing on this scale. time doesn ’ t necessarily help. the longer these gaps continue to build, the greater the risks, and the more difficult their resolution. what can we do to mitigate these risks? for the united states, these challenges put a premium on putting in place a more credible fiscal policy framework, maintaining as strong and resilient a financial sector as possible, and preserving an open and flexible economy. these things are all important and desirable, but they are more important, and we can less afford to tolerate any erosion, than would be the case if we were closer to a sustainable external position. improving our fiscal position is the most effective means we have available to reduce our vulnerability during this prolonged period of adjustment. we need to produce a substantial reduction in our structural deficit over the medium term and begin to reduce the more dramatic longer term gap 2 / 3 between our resources and commitments. and we need to restore a reasonable cushion in our structural budget balance to help us deal with future shocks. if we are unable to begin to generate more confidence in the capacity of the u. s. political system to produce these improvements, we would face a greater risk of future increases in risk premia. and even though substantial fiscal consolidation would not by itself bring the external imbalance down to a more sustainable level, it would improve the prospect for a smoother adjustment to that outcome. the general risk inherent in these imbalances — the risk of more adverse growth outcomes and asset price volatility — reinforces the importance of sustaining the strength and resilience of the u. s. financial system. our financial system today is in substantially stronger shape than it was even in the recent past, and the major institutions now appear to be managed so that they are less vulnerable to the type and magnitude of shocks they ’ ve experienced in the past couple decades. our challenge, however, it to make sure they are as well positioned to deal with the full range of potential future risks. and this requires an investment in risk management and controls commensurate with the increasing complexity of these challenges, and it requires a cushion of capital and liquidity large enough to capture the potential risk of losses in a less favorable macroeconomic environment. the increase in the flexibility and resilience of the u. s. economy over the past two decades has a lot to do with the increased openness of