is becoming even more important as we strive to deal more effectively with the complex challenges we face today and respond to the evident unequal effects of the pandemic. it is in times of change and uncertainty when qualities such as resilience and innovative thinking are essential, and the value of diversity of background, thought and experience are all the more important. the central bank will continue to require improvements in this area13 ; undertake detailed and thematic reviews14 ; and publish research and information on the issues and progress ( or lack thereof ) in improving diversity and inclusion in regulated rms15. technology and innovation advances in technology are bringing rapid and deep changes to the nancial services sector. these are impacting business models, decision - making, systems and processes, and products. they are having a material effect on the operation of nancial markets, nancial supervision and the economy. financial services rms are looking to innovation, such as increased automation ; digitisation of processes ; the use of algorithms ; and machine learning to deliver cost reductions and ef ciencies, and competitive advantage resulting from improved customer offerings. big data analytics can allow for advanced risk assessment and pricing16. new payment methods and platforms bring challenges for the traditional role and dominance of banks in this area, while digital payment channels have lowered the barrier to entry for alternative providers. innovation has the capacity to bring many bene ts for consumers, the economy and society in general. it is essential to the effective functioning of a competitive economy. customers require rms ’ systems and data to be available, reliable and secure. this is also important for nancial stability reasons. digital transformation can, without proper oversight, increase vulnerabilities in rms ’ it operations, with increased risks around it failures, outages and cyber - attacks. firms must strive to minimise the frequency and impact of issues and have an ability to recover quickly from them. resilient systems are a fundamental pre - requisite for successful innovation. the importance of operational resilience has been further reinforced by the experience of the immediate shock from covid - 19 and the ongoing shift in consumer behaviour and reliance on remote working. given the importance of operational continuity for the stability of the system and for consumers, businesses and the wider economy, we will continue to challenge how rms are ensuring that risk and control frameworks are operating effectively under the current working environment and are prepared for unforeseen operational disruptions. it is important to emphasise that ultimate responsibility for a rm ’ s it

mitigating the risks from the effects of climate change and taking actions that reduce these effects. boards and executives need to meaningfully act now to understand and address the challenges associated with climate change. in order to mitigate the risk and adequately position themselves to respond to these challenges, opportunities and regulatory expectations, rms will need to understand the impact of climate related risks on their business environment, their business models and investments. this requires lessons to be learnt from the pandemic, changing how we think about risks and probabilities over the longer term. the central bank is a signi cant participant in nancial markets itself, through its investment portfolio for example. investment choices are increasingly informed by climate and sustainability related considerations21. as members of the network for greening the financial system22 and the wider european regulatory system23 you can expect the central bank to become increasingly active and intrusive in its approach to the supervision of climate change risks. action is required by us all now. you can expect us to be seeking evidence that : boards are meaningfully considering climate change risk ; climate change risks are being incorporated and embedded in organisational risk management frameworks and mitigation ; climate risks are being considered as part of stress testing ; and the eu taxonomy of sustainable activities24 is being proactively applied. i will conclude here. unprecedented is an overused word. it is perhaps fair to say we are living through times that are unprecedented in living memory. but it is important that we do not believe that there is nothing that we can learn from history – from precedents – whether recent or long past. moreover, we can also learn from our experience in the pandemic, about how our core assumptions can prove to be unreliable, and about how we think about future events that may seem improbable in a given year but have a near certainty of occurrence over time. applying these lessons well will be important in how we emerge from the pandemic and how we meet the uncertain challenges ahead, whether these challenges arise from climate change, technology or some other source. finally, the pandemic also reminds us of the importance of the basics, the fundamentals of good hygiene, of compliance, of minding those around us, of basic risk management. improvements in the fundamentals of better governance ; better risk management ; improving your understanding and testing your assumptions ; and actively considering what could go wrong and preparing for it are critical to the nancial system being resilient and trust