would be upward pressure on interest rates in accordance with such improvement. the degree of monetary easing will increase if the bank contains such upward pressure and thereby maintains the shape of the yield curve. b. toward achieving the price stability target the bank projects that the timing of the year - on - year rate of change in the cpi reaching about 2 percent will be around fiscal 2019. in the outlook report, the bank has delayed such timing several times, and i acknowledge that there is some criticism on this point. the bank certainly aims to achieve the price stability target of 2 percent at the earliest possible time, and the delay in such timing is not desirable. however, what i believe is important for the bank is - - in the event that the 2 percent price stability target cannot be achieved due to economic and price developments at the time - - to thoroughly explain the reasons behind the target not being achieved and to implement monetary policy so that the economy will follow a path toward the 3 / 6 bis central bankers'speeches target. after all, it is well known that the policy framework of inflation targeting is expected to perform the role of a communication tool. as i mentioned earlier, the year - on - year rate of change in the cpi is in the range of 0. 0 - 0. 5 percent, meaning that there is still a long way to go to achieve the price stability target of 2 percent. nevertheless, my view is that the momentum toward achieving the target has started to steadily increase. in this regard, let me highlight two points. first, although it has been said that wages have not been increasing as expected, scheduled cash earnings have continued to rise for more than two years. let me also note that, as scheduled cash earnings have been rising steadily at small firms, where the majority of workers are employed, a clearly increasing number of households can now feel that their wages actually have been rising. this is highly important in terms of raising people's inflation expectations. the second point is that there clearly has been a growing impetus toward raising productivity, due in part to labor shortages. as i noted earlier, investment that serves a positive purpose - such as that in efficiency - improving and labor - saving machinery and equipment, and in research and development for growth areas - - is expected to further rise, and this will likely contribute to improving productivity. moreover, it has become easier for firms to take advantage of such new information technologies as artificial intelligence ( ai ) and the internet of things ( iot ). let

the boards hampered both the complete understanding / appreciation of the firm wide risk profile of the institution and the effective decision making in this regard at the board level leading to a sense of complacency regarding the risk management frameworks in place. also, there was a fundamental lack of expertise among the directors, especially the independent directors, to understand or respond to the risks in the desired manner. governance practices suffered from similar weaknesses at the senior management level. senior management failed to adopt and integrate the necessary systems to identify, manage, and report risk. 10 there were lacunae observed also in the mis in capturing the level and nature of aggregate risk arising in rapidly evolving balance sheets. further, risks were not properly priced which resulted in improper allocation of capital, inadequate preparation for tail risk events eventually leading to the precipitation of the crisis. another area of imbalance was the risk reward and remuneration framework. the compensation packages encouraged risk taking behaviour with short term profit objective as the immediate goal at the expense of the long - term financial health of the organization. the compensation structures did not factor in appropriate safeguards to check or mitigate the adverse consequences or losses that could materialise in the long run from the imprudent or excessive risk taking and jeopardize the safety and soundness of the organization. the crisis also highlighted the absence of enterprise wide risk decision making process. the risk management framework was based on silos rather than the enterprise level, thus missing on the comprehensive enterprise wide picture including an understanding of the interplay of risks across the organisation. as the overall picture of the risks was not available with the boards or the top management, the consequent controls and mitigating measures also turned out to be inadequate and ineffective which hindered effective risk management. vi. building a robust risk governance framework – the way forward there is an enhanced realisation that the risk governance demands a holistic approach and that risk appreciation should start at the top. a strengthened management information system ( mis ) supported by robust information technology platform is a necessary precondition for enhancing board efficiency in oversight and decision making. similarly, augmented skill sets and experience at the level of independent directors would go a long way in enhancing the board capacity. strong mis facilitate risk reporting to the boards in an the world bank and international finance corporation ( 2010 ), “ bank governance : lessons from the financial crisis ”, note number 13. the world bank and international finance corporation ( 2010 ), “ bank governance : lessons from the