we are trying to re - iterate with industry is that these are key issues that the firms themselves are responsible for. that they need to take more ownership of their governance and risk management, including a proactive, rather than reactive, approach to managing the risks and uncertainties facing their business and their customers. well - run firms know that this is not just about meeting regulatory requirements – but is in the long term interests of their businesses. and so while embedding good governance and proactive risk management is a supervisory priority of our own related to the financial sector, i think that this is something that should be a priority for boards more broadly. as the iod's standards for the board states, a board's key purpose " is to ensure the company's prosperity by collectively directing the company's affairs, while meeting the appropriate interests of its shareholders and relevant stakeholders. " 4 in this regard, while governance and risk management is fundamental to ensuring prosperity and appropriately meeting the interests of shareholders, it is not enough to have these things on paper – they need to be embedded throughout the organisation. and i would suggest that properly delivering and embedding these enablers all begins with culture. for without the right culture, good governance and strategic plans won't get delivered – or they won't get delivered right. and without the right culture, firms are unlikely to look after the long term interest of its stakeholders. boards should therefore look to play a pivotal role in overseeing the culture of their organisation. by setting the tone from the top, both through their interactions with the executive and by making culture an integral part of the organisation's strategy, boards can make a powerful contribution to establishing a strong ethical and cultural environment throughout. you know it when you see it so, i hope the importance of good governance, good culture and good risk management is clear, and that boards can play an important role in delivering good. but what does " good " look like? governance and culture is of course a matter for each organisation – there is no one size - fits - all model, and no two boards are alike. but, generally, " good " looks the same – as in you know it when you see it ( or indeed when you do not ). 3 / 6 bis - central bankers'speeches however, as former central bank governor philip lane once said – the " defining cultural test is how a firm deals with adverse situations5 and indeed adverse situations are the real test too for

the other hand, time and time again we have seen how poor governance is the root cause of many failings ; how external shocks can amplify poor management behaviour ; and in the world of financial services, how risks of consumer and investor detriment rises when poor business practices and weak business processes are allowed to persist. for this reason – and following the hard lived experience of the governance, risk management and cultural short - comings that led to the financial crisis – strengthening the governance framework of financial services firms and improving the leadership and culture of these organisations has been a key focus for policymakers and regulators over the last 15 years. i am happy to say we have come a long way since then – both in terms of the regulatory framework as well as the increased importance placed on good governance by all stakeholders, including industry. while standards have improved, however, it is a journey we are all still on. established firms continue to improve their governance and culture – through supervisory engagement and lessons learned from previous failings. many new entrants, especially fast growing and innovative firms, on the other hand are at the start of their own commercial and regulatory journey – and from our point of view have the opportunity to embed good practices at the very outset. in this regard, it is important that good governance and risk management is treated as a founding pillar of their business. that it is seen as a key enabler for growth, rather than an afterthought in their commercial strategy. 3 for good governance and risk management is not just good for compliance – it is good for business, good for shareholders, good for customers, and good for the economy. furthermore in the fast changing environment we operate in, and in light of the evolving challenges we face, governance is also something that needs to continuously evolve. something that needs to reviewed, updated and enhanced regularly – not just in the face of evolving governance codes, but through lessons learned and in the spirit of ongoing efforts to foster confidence and trust in your organisations. risk management, traditionally a backward looking exercise based on historic data, needs to adapt too – with more forward - looking risk management techniques necessary in a changing and uncertain world. tone from the top so, good governance and robust risk management practices are essential components of sound and successful organisations. and indeed in a rapidly changing world, and in a heightened external risk environment, they are becoming increasingly so. 2 / 6 bis - central bankers'speeches as a regulator and supervisor, one of the things