it will look like a curse when foreign investors head for the door. the present monetary order is more resilient than the previous regime of fixed exchange rates, but crises can still occur, and if they occur they are more likely to be extensive and spread rapidly. and globalisation, of course, goes far beyond financial integration. global companies are located all over the world. they have to deal with different legal frameworks, with different business cycles, with different political realities. the range of risks to be met by international business is thus far broader the economist, global finance survey may 2003. than in the past and demands permanent monitoring and continuous improvement of risk management at all levels. financial, operational and reputational risks are all new by - products of globalisation, and we are only just beginning to come to terms with them. a survey of corporate directors quoted by the economist in 2004 showed that a clear identification of risks is still too difficult for many well trained ceos : 36 % of the corporate directors polled actually admitted that they did not fully understand the risks faced by their company. implications for the private sector with globalisation, your lives have undoubtedly become more difficult. operating at a global level is infinitely more complex than the regional approach of the past. globalisation is a challenge for business management. it entails many sources of uncertainties but also offers many vehicles to cope with risk. can we beat these new risks? no. we must prepare ourselves to face them. we can only insure against some risks, but we cannot predict where the next blow will come from. i think that this is the most important characteristic of our times. what has increased is not our insecurity. we are, in many respects, safer than in the past. this, i hope, is what i have managed to convey to you. my conviction is that the world today is better managed than in the past and, in that sense, is safer. what has increased, however, is the magnitude of a potential crisis. this is what i refer to as uncertainty. the big challenge for international business of today is to learn to live with uncertainty. and in this domain we still have a way to go. nowadays, our difficulties in dealing with uncertainty permeate all our discussions about the responsibilities of different private and government agents. i perceive an understandable – but in my opinion misconceived – nostalgia for a world that used to appear safer, thanks to regulation. we hear demands for the

##s the liquidity in the sic system, sets the conditions for participation and is responsible for crisis management. cooperation between sic ag and the snb is excellent. the snb would like to congratulate sic ag and telekurs group on this anniversary and thank them for the outstanding quality of their work. the boards of directors of swx group, sis group and telekurs group have recently signed a declaration of intent regarding the merger of their companies, with the goal of founding a swiss financial centre infrastructure holding company. sic ag, or rather telekurs group, would be part of this holding company. the snb is affected by this development in different ways. on the one hand, we are a direct contractual partner of all three companies involved. on the other hand, it is our task to oversee the systemically relevant payments and securities settlement systems. the swiss value chain, run by the three companies, is of vital importance for the implementation of monetary policy. there is no alternative infrastructure for our monetary policy operations. therefore, we will keep a very close watch on further developments in this area. 3. developments in the financial markets the positive underlying sentiment in the international financial markets remained largely unchanged in the first half of 2007, despite some turbulence in the stock markets, which was rather strong at times, and some difficulties in the us sub - prime mortgage market. on 27 february, after a correction in the chinese stock market, major falls in share prices were recorded worldwide. the price decline temporarily gave rise to fears that the current bull market, which has lasted for many years now, could come to an end. after only a few days, however, the markets returned to normal. a few weeks later, most share indices had already compensated the losses ( figure 1 ). a further correction has occurred in the past few days. however, despite this turbulence, the rise in implicit volatilities – a measure of expected uncertainty – has been relatively insignificant and shortlived in historical terms. implicit volatilities are still at a very low level ( figure 2 ). in addition, interest premiums on credit risks both for companies and emerging economies remain low, although yields on long - term government bonds have increased markedly since the beginning of march. as in the case of the financial market turbulence of may 2006, the latest correction on the stock market has been negotiated without any major difficulties. the positive underlying sentiment in the markets and the appetite for high - risk investments remained for the most