lim hng kiang : sharpening risk management capabilities keynote address by mr lim hng kiang, minister for trade and industry and deputy chairman of the monetary authority of singapore, at the 43rd association of banks in singapore annual dinner, singapore, 28 june 2016. * * * chairman and council members of abs, ladies and gentlemen, it is my pleasure to join you at the 43rd abs annual dinner this evening. the global economy : slower for longer 2. since i addressed the abs in 2014, the global economy has continued to recover. but growth has been lacklustre and uneven. risks remain, not least the prospect of political instability and the possibility of a rise in protectionist tendencies in the major economies. 3. in the near term, the unexpected results of the uk ’ s eu referendum or brexit, would very likely continue to reverberate across financial markets around the world. it is a clear reminder of the risks that we face and how financial institutions and regulators must work together to ensure the continued resilience of our banking system and financial sector. • mas had been prepared for this possible outcome, and had taken precautionary measures, including keeping in close contact over the past weeks with banks in singapore, foreign central banks and regulators. our markets continue to function in an orderly manner and our financial system remains sound. 4. beyond the immediate market turbulence, brexit will also have wider economic implications for the region and singapore. while it is too early to make a firm call on the longer term consequences of the event, it will certainly weigh on both market confidence and on an already listless global recovery. • among the developed economies, the us has been most advanced in its recovery. this provided the impetus for the first interest rate hike in more than nine years in december 2015. however, the federal reserve has since held back from further rate increases amid a moderation of growth in the us and in many other parts of the world, as well as a rise in financial market volatility. • some central banks in europe and japan have adopted negative policy rates alongside other monetary easing measures to further support their economies, with mixed results. central banks will have to be vigilant against undue financial market stresses arising from last thursday ’ s referendum in the uk, and to be prepared for a period of heightened uncertainty that such an unprecedented event might entail. • in asia, china ’ s economic slowdown, softer commodities prices and weak demand in key

, 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