, outsourcing arrangements involving certain customer information will be subject to a higher standard of care. • third, a greater focus on fis ’ outsourcing risk management framework. fis were previously expected to pre - notify mas of any material outsourcing arrangements, and mas would impose prudential requirements on the fi, where necessary. with the growing prevalence and complexity of outsourcing arrangements, such a caseby - case approach has become less tenable. instead, mas will continue to assess and monitor the robustness of fis ’ outsourcing risk management frameworks while fis will continue to be responsible for ensuring the safety of all of their outsourcing bis central bankers ’ speeches arrangements. the revised guidelines will no longer require fis to pre - notify mas of any outsourcing arrangements. 24. the guidelines are not intended to be exhaustive. mas recognises that the diverse range of outsourcing arrangements and rapid pace of progress in digital technology preclude a prescriptive approach to risk management practices for outsourcing or a one - size - fits - all set of rules. mas will adopt a risk - based approach in implementing the guidelines. conclusion 25. let me conclude. 26. a tougher macrcoeconomic environment and growing complexity of operational and technology risks will place greater demand on banks ’ risk management and compliance systems. even as banks continue to upgrade their systems and processes to strengthen their risk resilience, it is equally important that banks regularly test the robustness of their contingency plans and capability to manage tail risk events. i am glad that the industry continues to demonstrate its commitment to sound risk management with your investments in systems, technology and in your people. mas appreciates your close co - operation to develop and update our risk management guidance, and your active participation in iwst exercises. thank you. bis central bankers ’ speeches

future direction. 29. in addition, asean is positioning itself to ride on the growth of china and india. asean's total trade with china and india has grown significantly over the past decade, and in 2004 amounted to us $ 80 billion and us $ 17 billion respectively. 30. asean is working hard to ensure that its free trade agreements ( ftas ) with china and india are completed and fully implemented by 2010 and 2011 respectively. besides china and india, asean is also negotiating ftas with other major economies like japan, south korea, australia and new zealand. japan's role and response 31. in the past decades, japan has led the growth of china, south korea and many other countries in the region in a'flying geese'formation. japan has been an important source of investments, capital and technology, and a major export market for many asian countries. after a decade of stagnation, japan is firmly back on the path of healthy sustained growth. prime minister junichiro koizumi's leadership and overwhelming victory in the recent election give cause for hope that his reforms will be sustained. as the second largest economy in the world, japan will remain an important global player. 32. japan, together with the us and china, form the strategic triangle that undergirds regional stability. with india's rise, a new strategic triangle of us - china - india will, in time, be superimposed upon it. stable relations amongst the key players will be critical for regional peace and development. 33. recent tensions in sino - japanese relations are of concern. such strains are part of the deep ambivalence with which beijing and tokyo view each other. both china and japan have their respective positions on the history issue. china's attitude towards japan is coloured by japan's reluctance to come to terms with its world war ii history, while japan's attitude towards china is shaped by its anxiety over how china's rise will alter the regional balance and affect japan's interests. domestic politics and rising nationalism in both countries are complicating factors. 34. fortunately, both countries want to avoid a collision. there are strong incentives for china and japan to deepen ties. china needs investments, technology and know - how from japan, while japan needs the markets and production base in china. 35. the tensions in sino - japanese relations are understandable because there has never been a period in history when china and japan are simultaneously strong powers. today,