" just say no " is easy enough to say, but harder to do when it means cutting colleagues off from a potentially highly profitable fee, or trade, or investment. the internal risk managers i met during my short life in the private sector were technically proficient. they may have been under pressure to agree to risky trades. but what was most lacking, in the case i ’ m aware of, was somebody taking a system - wide view of the risks that were being faced, someone with the capacity to ask tough questions about the possibility of radical changes in the market environment – and then getting management to do something about it. there is a delicate point here. if risk managers are required to assign high probabilities to extreme scenarios, such as those of the last year, the volume of lending and risk - taking more generally will be seriously and dangerously reduced. it is neither wise nor efficient for the management of financial firms or their regulators to require financial institutions to become excessively risk averse in their lending and market activities. but if these institutions pay too little attention to adverse events that have a reasonable probability of occurring, they contribute to excesses of volatility and crises. 17 compensation and risk taking. 18 in its " principles for sound compensation policies ", the fsf specifies ( pp. 2 - 3 ) that : compensation must be adjusted for all types of risk ; " our banks are beyond the control of mere mortals ", financial times, july 8, 2009. a review of corporate governance in uk banks and other financial industry entities, prepared for the uk prime minister and the treasury, july 2009. see also oecd, corporate governance and the financial crisis : key findings and main messages, june 2009 ; and fsf, fsf principles for sound compensation practices, april 2009. the report specifies " ceo or fd ", where fd is the finance director. this paragraph is based on the assumption that there is a rational expectations equilibrium in which companies take reasonable risks and make profits commensurate with those risks. see the report by the fsf, fsf principles for sound compensation practices, april 2009. the oecd report on corporate governance, op cit, contains an excellent summary of the issues relating to remuneration practices, actual and desired from the viewpoint of financial stability and efficiency. for the modern theory see for example lucian bebchuk and jesse fried, pay without performance : the unfulfilled promise of executive compensation outcomes must be symmetric with

to more “ activity - based ” regulation in mission : to foster price stability and a sound financial system macroeconomic stability vision : to be a centre of excellence in upholding light of the complex network of transactions and players in financial services. in addition, our licensing regime will also need to be continually redesigned to bring new types of service providers within the regulatory ambit. the good news is that some of the emerging technologies may contribute to better regulation, because they could facilitate regulatory compliance and reduce compliance costs. the bank of uganda will be studying how some of these new technologies could be employed to enhance security, identify suspicious transactions and facilitate regulator - bank interactions. the key message to kcb uganda and all the other supervised financial institutions in uganda is that the next decade is going to be a very challenging one. technological advancement is going to present a lot of exciting benefits, but there will also be attendant risks. to survive and thrive, the banks must continuously institute robust risk management frameworks which are capable of prudently mitigating these risks in order to protect depositors ’ funds and ensure the soundness of the banks. with these remarks, i once again extend my heartfelt congratulations to kcb uganda on this milestone of marking ten years of banking services in uganda and i wish you many more fruitful years to come. i thank you. mission : to foster price stability and a sound financial system macroeconomic stability vision : to be a centre of excellence in upholding