media and research - speeches speech during the fscc release of the systemic risk crisis management framework date : june 05, 2022 occasion : fscc release of the systemic risk crisis management framework speaker : bsp governor benjamin e. diokno ladies and gentlemen, good morning. the last three decades have seen significant developments in the financial market. technology has practically eliminated physical divides, while financial engineering has allowed instruments to be specifically designed for certain stakeholders with certain needs at a certain point in time. as a result, financial markets today are complex and highly interlinked across national borders. this creates a value chain as much as it provides the channels for various spillovers. we have seen, over the past three decades, the asian financial crisis, the global financial crisis and, more recently, the covid - induced global recession. although these have happened at nearly a decade ’ s interval between them, regulators as well as the public do not take comfort when the unexpected happens. this is the nature of crises. they are unexpected but creates significant disruptions as they unfold. someone will always bear the costs of the least disruptions, and invariably, it is the public. as we move forward towards full recovery, now is the opportune time to look ahead, recognizing lessons from the past while anticipating the possibilities of the future. this is why the financial stability coordination council put together this systemic risk crisis management framework which we are releasing today. financial stability, after all, is about systemic risks and the continuous task is to enhance the resilience of the financial system. stability is, therefore, simply about risks and resilience, preemptively assessing the former while ensuring the latter by both avoiding shocks to the system as well as strengthening the ability to recover once those shocks occur. the srcm is in keeping with the objective of managing systemic risks and strengthening the resilience of the system. it defines arrangements among the fscc agencies that we will rely on in good times so that we are best organized under stressed conditions. the srcm is a strategic document that highlights how ongoing tasks contribute to crisis management and identifying initiatives which we believe are needed moving forward. as we develop the tactical plans that underpin this strategic document, the srcm is thus a living document that evolves with the market and the needs of its stakeholders. the council fully understands the importance to the public of managing systemic risks and mitigating its disruptive effects. while financial stability is not about a

speeches exposures or monoline business models, for example, with a heavy exposure to customers in the crypto - asset industry. the cyclical nature of regulatory issues itself presents a challenge for regulators. over time, examiner attrition and retirements that come along with an aging workforce erode institutional knowledge, expertise, and experience, making it more difficult to maintain an appropriate focus on longstanding risks. as we look to the future of banking, we should consider the dynamic nature of the banking system and know that we must be assertive in identifying known and emerging risks, and nimble in responding to them, keeping in mind that risks that appear to be extinct may only be hibernating. banking changes bring new risks of course, even with a relentless focus on the known risks that affect the banking system - credit risk, interest rate risk, liquidity risk, cyber risk, and others - we also know that as the banking system evolves, the risks evolve as well. even though change in the banking system is constant, many banking services have stayed relatively similar over time. the use of paper checks, while helpful to consumers in many ways, have reemerged as a source of increased fraud risk. the advent of the automated teller machine ( atm ) and electronic banking opened up new avenues for banks to bring convenience and access to their customers, but also gave criminals new opportunities to attack the banking infrastructure. even the legal and regulatory changes that allowed interstate banking to flourish fundamentally altered the composition of the banking sector, bringing both greater efficiencies of scale as banks took advantage of opportunities to consolidate, but also putting pressure on some banking models - and perhaps perversely resulting in less availability of local banking options in some geographic and socioeconomic areas. of course, recent changes provide consumers with enhanced options for services, including improvements to the u. s. payment system. recent enhancements in real - time payments services have made them more widely available. but with this growth comes additional risk, including limitations on the ability to detect and prevent fraud. banks also increasingly rely on important relationships with third parties, including service providers and partners who provide services to customers through " banking - as - aservice " arrangements. as third - party relationships continue to play an increasingly critical role in the banking system, they present another new avenue for risks that must be managed. emerging risks often arise in the context of a new mindset we see among some bank directors and management. this mindset