defined strategy. finally, “ pillar 3 ” recognises that markets can serve as an ally to official supervision when participants have access to sufficient and timely information on a bank ’ s risk profile. together, the three pillars are intended to complement each other and promote a more flexible, forward - looking and comprehensive approach to capital supervision. elements of all three pillars certainly already exist in the supervisory systems of leading economies : but basel ii represents a concerted effort to apply those pillars more consistently across countries within a common framework. that, in turn, will help to reduce the burden on internationally active banks and promote a more level playing field for global competitors. while basel ii is a large step forward for safety and soundness standards, in many ways it is building on the advances that banks have long been developing on their own. we believe that it is important to recognise those advances so that supervision remains relevant to banking activities today. likewise, adopting basel ii now will maintain banks ’ momentum in innovating and in strengthening their products and processes so that they can better serve as sources of credit and growth to businesses and consumers tomorrow. incentive - based approach it is clear then that basel ii is about much more than just setting better quantitative minimum capital requirements. it is about establishing incentive - based approaches to risk and capital adequacy management, within the framework of the three mutually supporting pillars. on a micro level, the new approach will promote better risk management, adequate capitalization and transparency. on a macro level, it will contribute to financial stability and the resilience of the banking system. let me expand a little on the latter point. i am convinced that when banks have the right incentives to manage their risks appropriately, to hold sufficient capital and to improve transparency, the banking system will become more resilient, more stable and better able to serve as a source for credit and growth. those characteristics matter greatly to the livelihood of our citizens, to the outlook for commerce and business, and more generally to the health of our economy as a whole. in order to reinforce its relevance as a macro standard, the new framework incorporates a number of elements such as the requirement to use longer time horizons in the design of internal rating systems and in the average calculations of key variables, and also the need to carry out stress tests and conduct calculations in downturn conditions. all these elements will ensure that bank managers are conscious of how risk - drivers change through the cycle and in stress conditions, and that they incorporate these elements into their

27. 11. 2020 opening address of the 19th conference – club de gestion de riesgos de espana margarita delgado deputy governor introduction many thanks to the risk management club for their kind invitation to open this annual conference. we are now into its nineteenth edition that, inevitably, will focus on the new challenges in the aftermath of covid - 19. the title of this conference refers to the “ new world ” that will be awaiting us after overcoming the crisis caused by the pandemic. needless to say, we all wish that this happens as soon as possible. it may seem a little excessive to talk of a “ new world ” after the pandemic, but i believe to some extent it will be. we should remember that crises are periods of change, in which what is established is called into question. each crisis is certainly different from previous ones. or rather it should be different, at least if we supervisors, regulators and banks learn from the past and avoid making the same mistakes. in any event, it seems we have now been hearing the word “ crisis ” more than ever for over a decade. until relatively recently, when we referred to “ the crisis ” we had the global financial crisis in mind. now, sadly, we must clarify which crisis we are talking about. it could be said that the society we live in may be the result of how we have tackled and resolved each of the crises we have faced. with effort and sacrifice our society has overcome problematic situations, some not so distant in time. and the pandemic will certainly be no exception. as in other previous crises, it is vital that we should be able to draw lessons allowing us to improve those aspects that have fallen short, that have not worked as foreseen or that need to be strengthened. naturally, this need to draw lessons applies to banking regulation, but also to health, social insurance and economic aspects that have evidenced shortcomings. as you know, the banking supervisory and regulatory frameworks were overhauled to include the lessons we learned from the previous financial crisis. while unrelated, we could say that the situation caused by covid is the first test for this global reform and, almost inevitably, we will be assessing the functioning of the different components of the new framework after facing this global, exogenous, severe and totally unexpected shock. let me begin with a very swift reference to the supervisory framework. i believe we will all agree that the launch of the single supervisory mechanism ( ss