is a key element in the evaluation of how rapidly the economy can grow before raising concerns about inflationary pressures. errors in measuring either output or hours of work - - unless they are in both and just happen to exactly offset each other - - will lead to distortions in the measurement of productivity. such a distortion occurred in the mid - 1990s. work done at the time by the board's staff suggested that measured productivity in some sectors of the economy was implausibly low. 2 as a consequence, chairman greenspan urged the federal open market committee ( fomc ) to pursue a more accommodative monetary policy than the published productivity statistics, at the time, might have suggested. the result was a period of high economic growth and low inflation. prices are another set of data that are important for monetary policy. the primary responsibility of monetary policy is to ensure that we have a low and stable rate of inflation and the maximum sustainable rate of employment growth. inaccurate price measurement could result in inaccurate forecasts of the direction of inflation and, thereby, lead to policy choices that are too tight or too accommodative. as a researcher, i find that timely and reliable information is critical for analyzing, measuring, and calibrating the ways in which the various parts of our complex economy operate. ben s. bernanke ( 2004 ), " the logic of monetary policy ", speech delivered before the national economists club, december 2, 2004. carol corrado and lawrence slifman ( 1999 ), " decomposition of productivity and unit costs, " american economic review, vol. 89 ( may ), pp. 328 - 32. although most people think of banks, money, and interest rates when they hear mention of the federal reserve, the central bank is also an important producer of economic statistics. among other things, the federal reserve publishes data on interest rates, industrial production, and financial accounts for the nation - - the flow of funds system. the federal reserve also has a strong commitment to promoting economic education and financial literacy. recently we have begun using the latest internet - based technology to make the data we publish more accessible and easier to understand. in particular, last month we added to our web site a new data download application, which provides interactive access to federal reserve statistical data in a variety of electronic formats. we view this new feature as a key element in our mission of promoting financial education. a cost - benefit framework as an economist, i like to think about the

##so requires all managers to, at least once a year, step back from their other duties and evaluate risks and controls. each manager should consider the current and planned operational changes, identify the risks, determine the appropriate mitigating controls, establish an effective monitoring process, and evaluate the effectiveness of those controls. managers are then supposed to report their assessment up the chain of command to the chief executive officer, with each new level of management in turn considering the risks and controls under their responsibility. the results of this process are ultimately to be reported to the audit committee of the board of directors. in the case of banks, management publicly reports on its assessment of the effectiveness of controls over financial reporting and the external auditor is required to attest to this self - assessment. thus, the process helps managers communicate among themselves and with the board about the dynamic issues affecting risk exposures, risk appetites, and risk controls throughout the company. risk assessments such as the one outlined in coso presumably could also be useful in assessing the risks and controls from various lines of business when formulating business strategies. but not all corporations and boards consider risk as a part of their annual strategic planning or other evaluation processes. the 2002 survey of 178 corporate directors conducted jointly by you ( the iia ) and the national association of corporate directors showed that directors are not focusing on risk management. i was surprised to learn that 45 percent of directors surveyed said their organization did not have a formal enterprise risk management process - - or any other formal method of identifying risk. an additional 19 percent said they were not sure whether their company had a formal process for identifying risks. these percentages indicate that there are companies out there that have directors who don ’ t understand their responsibilities as the representatives of shareholders. the shareholders of those companies should be asking the directors how they govern an organization without a good understanding of the risks the company is facing and without knowledge of a systematic approach to identifying, assessing, monitoring, and mitigating excessive risk - taking. i trust that none of the directors who participated in the survey were on the board of a financial services company. although directors are not expected to understand every nuance of every line of business or to oversee every transaction, they do have the responsibility for setting the tone regarding their corporations ’ risk - taking and establishing an effective monitoring program. they also have the responsibility for overseeing the internal control processes, so that they can reasonably expect that their directives will be followed. they are responsible for hiring individuals who have