pursuing low and stable inflation and contributing to maximum sustainable employment, without creating undue volatility in output, interest rates and the exchange rate ; maximising financial system soundness while supporting efficiency, competition, innovation, and inclusion ; promoting certainty of cash availability while promoting technology innovation in payments and settlement systems ; ensuring robust payment and settlement systems, while encouraging competition ; and being the liquidity provider in extreme financial market events while minimising moral hazard in market behaviour and operating prudently with the bank ’ s balance sheet. these trade - offs have always existed in economic practice, but they have varied in their definitions, importance, and presence in the reserve bank ’ s legislation, and societies expectations. our task is to build a consistent, coherent, and transparent approach to managing and explaining these objectives, trade - offs, and our risk appetite across all aspects of our work. figure 1 our purpose, vision and values 1 our context let me set out the hierarchy of our objectives which form the basis of many of the trade - offs we need to consider. at the top of the pyramid, the reserve bank is given authority to carry out a broad set of tasks via its legislation. the rbnz act 20212, which came into effect in the middle of 2022, replaced our previous legislation from 1989. this new legislation sets out our purpose of ’ promoting the prosperity and wellbeing of all new zealanders and contributing to a sustainable and productive economy ’. as outlined in the relevant cabinet papers3, this purpose is an explicit recognition that central bank functions are not ends in themselves, but contribute towards much broader policy and societal goals. we pursue our purpose through our statutory objectives, i. e. price stability, financial stability and providing the functions of a central bank. underneath this legislation sit our remits from the minister of finance. while we have statutory independence from the government – meaning we have considerable operational autonomy to achieve our objectives and intended outcome – the remit documents explicitly outline what the government of the day wishes us to take into account of when pursuing our objectives. _ _ _ _ _ _ _ _ _ _ _ _ statement of intent 1 july 2022 - 30 june 2026 https : / / www. rbnz. govt. nz / hub / - / media / project / sites / rbnz / files / publications / statements - of - intent / rbnz - soi - 2022. pdf bank of new zealand act 2021 https : / / www. legislation. govt

. obtaining the right balance between these factors will largely determine the direction of the western economies with a positive outcome being sustained ultimately by the return of business and consumer confidence leading to investment and productivity growth. similar forces can be seen at play in the new zealand economy. the difference being that the imbalances and structural issues here are not nearly as deep - seated as in many of the western economies. furthermore, new zealand has been fortunate to be placed geographically in the eastern part of the pacific primarily selling soft commodities that are now experiencing increasing demand from asian trading partners who continue to experience relatively good growth. the canterbury earthquakes have proved to be an additional test of resilience for the country and although insurance will cover the majority of the cost of recovery, the process of rebuilding will take much longer than originally thought and may well cost more than currently forecast. the impact of these events on the provision and cost of insurance is now becoming apparent and is reflective of a general review of the insurance cover for natural disasters world - wide. the frequency and intensity of these types of events seems to be on a rising trend creating further management challenges for private and public enterprises. bis central bankers ’ speeches institutional response institutional language is now coloured by words such as austerity, crisis, collapse, disaster response, instability, volatility, vulnerability and, above all, uncertainty. the gfc exposed the weaknesses of risk management to the world and especially the inadequacy of institutions that allowed their risk management practices to be subverted by the drive for short term profitability. many of these institutions no longer exist and if they do, not in a form they would have recognised prior to the gfc. the irony is that despite its lack of strength in the decades building up to the gfc and its ultimate failure, risk management remains absolutely critical to the success of institutions. furthermore, the incidence of risk means that the enterprise needs to take a long run view of its business not a myopic, short run, approach. which is a good thing if it helps to make the business operating environment more stable. the issues outlined earlier in this paper reveal the complexities that private and public enterprises will need to navigate in the future. possession of a metaphorical radar, capable of identifying obstacles both near and far, should be second - nature to those leading and managing the enterprise. in the current climate effective risk management aligns very closely to the theme of your conference : “ embracing uncertainty and delivering value in turbulent times ”.