the enhancement of risk management by building incentives directly into our system of supervision, the foundation of which consists of regulatory capital rules. along that line, the committee is now engaged in an historic effort to revise the international rules governing the minimum capital levels required of internationally active banks. in doing so, we have endeavored to ensure that the “ new basel accord ” is not merely another set of rules, but rather a framework that recognizes the important innovations in risk management that banks have achieved and encourages continued improvement over time. in my remarks today, i ’ d like to share with you some thoughts on how bank supervisors have worked to embrace and encourage those developments. my remarks will cover three related areas. i ’ ll begin with thoughts on how enhancements in banks ’ risk management processes, driven by business imperatives, have concurrently led supervisors to move to a more process - oriented, risk - focused approach to supervision. next, i ’ ll spend a few moments discussing how provisions in the new basel accord - or “ basel ii ” - support further changes in our supervisory approach, and promote further enhancements in risk management. finally, i will describe how these developments will be coming together in our supervisory approach going forward - particularly in terms of our supervisory expectations for management of market risk, credit risk, and operational risk by large banking organizations. while i will offer my views as a former banker and now as a bank supervisor, i believe that many of the themes offer insight for other sectors of the financial services industry as well. complementary effort by banks and supervisors to assess risk let me begin by sharing some thoughts on the efforts banks themselves have undertaken to develop a more forward - looking approach to risk management. progress has clearly been made in the management of market and operational risks, but the advances made in the area of credit risk are, i think, particularly illustrative. loan officers and risk managers now have at their disposal an everexpanding array of software, databases, models, and risk rating systems intended to provide empirical insight into a risk once not readily quantified. our examiners have noted growing sophistication in banks ’ internal risk rating processes, portfolio management methodologies, and the use of stress testing. as you know, all of these new tools and processes were developed and refined to promote a bank ’ s competitiveness and to protect it against loss - and not just to respond to a regulatory mandate. the resulting benefits to the stability of the financial sector can be seen objectively in

william c dudley : the national and local economic outlook – an update remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the university of bridgeport, bridgeport, connecticut, 8 april 2016. * * * jaison abel, jason bram, tony davis, richard deitz, jonathan mccarthy and joseph tracy assisted in preparing these remarks. good morning. i am very pleased to be in bridgeport and to speak with you today. i would like to give a special thanks to the university of bridgeport for their part in making this event possible. my visit today is part of our ongoing efforts at the federal reserve bank of new york to better understand the regional economy. we plan trips like this so that we can meet with a diverse array of stakeholders in the region to gain insights and perspectives on the local economy. these trips also allow us to hear from main street about the major issues and concerns affecting people and businesses in the area. fairfield county is our first destination in 2016, and this is the second time we have visited the area in the past three years. i am looking forward to meeting with a number of different groups today. after starting our day here at the university of bridgeport, we will meet with an organization called the workplace to hear about some of the nationally - recognized programs they have successfully developed to help the long - term unemployed find jobs. long - term unemployment is a significant problem in the broader economy, and something that i will discuss in more detail later in my remarks. next, we will take a tour of the american job center, an organization that provides workforce assistance to job seekers in conjunction with local businesses. later we will attend, a roundtable lunch with members of the bridgeport regional business community. and, finally, we will meet with leadership from the housing development fund, new horizons and neighborworks america to hear about the state of affordable housing and community development in fairfield county. these trips are valuable to us, and represent one of the many ways in which the new york fed engages with people and businesses in our region. another one of our efforts in this vein is our small business credit survey – the latest version of which was released last month. this survey – which includes responses from across 26 states – helps us understand the challenges facing small businesses in the region, focusing on financing needs and impediments to obtaining credit. we partnered with multiple organizations throughout connecticut to produce this survey – some of which are right here in bridgeport – and received responses