at an exponential rate. in this regard, one of the biggest risks faced by risk managers is not being sufficiently prepared for the future. as yogi berra once said, " the future ain't what it used to be. " yet risk managers face the challenge of ensuring their organizations are sufficiently prepared for whatever events the future holds. it's true that we cannot predict the future in a specific way. but if the past is any guide, we can comfortably expect that new technologies will enable us to overcome problems and challenges that today appear to be insurmountable. at the same time, however, innovation will bring new problems and challenges. as risk managers, the key question for us to answer is " how can we best cope with the dramatic changes and challenges that will inevitably occur? " preparation is the easy answer, but foresight and discipline are also needed. at a fundamental level, managers need to make sure that their organizations have in place the risk - management policies, processes, and technologies to properly measure, monitor, and control their risk exposures. beyond the basics, the next imperative is to do some hard thinking about the future. more specifically, managers need to conduct scenario analysis and scenario planning - - and this is one area of risk management that is sometimes overlooked or not taken seriously. scenario analysis and scenario planning are difficult ; they cannot be done on the fly. for many financial organizations, scenario analysis starts and ends with quantitative exercises that measure exposures to specific risk factors, such as changes in interest rates or credit spreads. to realize the full benefits of scenario analysis, however, the analysis must move beyond quantitative exercises. a comprehensive scenario analysis should encompass a thoughtful and thorough analysis of potential, but plausible, major changes in the economic, political, and social landscape. what are these changes? how will they affect your business? how will you respond to them if they occur? this analysis is the primary responsibility of risk management. but scenario analysis is not the end goal. something must be done with the results of the analysis. management must ask itself whether the organization needs to restructure its balance sheet or modify its current risk - management strategy in order to be prepared for scenarios that may unfold in the near future. this strategizing is at the core of effective scenario planning. some key scenarios you should consider as part of your scenario planning include how forces such as continued globalization, technological advances, and competition from product innovation will affect your particular line of business. for

middle of last year. nonetheless, inflation pressures continue to run high, and the process of getting inflation back down to 2 percent has a long way to go. despite 1 / 3 bis - central bankers'speeches elevated inflation, longer - term inflation expectations appear to remain well anchored, as reflected in a broad range of surveys of households, businesses, and forecasters, as well as measures from financial markets. monetary policy with inflation remaining well above our longer - run goal of 2 percent and with labor market conditions remaining tight, the federal open market committee ( fomc ) has significantly tightened the stance of monetary policy. we have raised our policy interest rate by 5 percentage points since early last year and have continued to reduce our securities holdings at a brisk pace. 2 we have been seeing the effects of our policy tightening on demand in the most interest ratea€ “ sensitive sectors of the economy. it will take time, however, for the full effects of monetary restraint to be realized, especially on inflation. the economy is facing headwinds from tighter credit conditions for households and businesses, which are likely to weigh on economic activity, hiring, and inflation. 3 the extent of these effects remains uncertain. in light of how far we have come in tightening policy, the uncertain lags with which monetary policy affects the economy, and potential headwinds from credit tightening, the fomc decided last week to maintain the target range for the federal funds rate at 5 to 5 - 1 / 4 percent and to continue the process of significantly reducing our securities holdings. nearly all fomc participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year. but at last week's meeting, considering how far and how fast we have moved, we judged it prudent to hold the target range steady to allow the committee to assess additional information and its implications for monetary policy. in determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, we will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. we will continue to make our decisions meeting by meeting, based on the totality of incoming data and their implications for the outlook for economic activity and inflation, as well as the balance of risks. we remain committed to bringing inflation back down to our 2 percent goal and to keeping longer - term inflation expectations well anchored. reducing inflation is likely