of the new system will include subcomponents that consider ( 1 ) the competence of the board of directors and senior management ; ( 2 ) policies, procedures, and limits ; ( 3 ) risk monitoring and management information systems ; and ( 4 ) internal controls. these subcomponents will be evaluated in the context of the risks undertaken by, and inherent to, the banking organization and the overall level of complexity of the firm ’ s operations. the analysis of financial factors will include subcomponents rating consolidated capital adequacy, the quality of the bank holding company ’ s consolidated on - and off - balance - sheet assets and exposures, the quality and sustainability of earnings, and liquidity on both a consolidated company and a legal - entity basis. the analysis of the impact of nondepository entities on the consolidated entity will incorporate an evaluation of both the risk management practices and financial condition of the non - depository entities. it may consider strategic plans, the impact of losses or control breakdowns, and legal and reputational considerations, as well as financial factors such as capital distributions, intragroup exposures, and consolidated cash flow and leverage. what i hope is evident from my brief description of the new bank holding company rating system is that the framework looks at risk management and financial factors at the legal entity level, at the level of functional activities across corporate entities, and at the consolidated, enterprise - wide level. the coso framework : enterprise - wide risk management for corporations the focus on oversight and risk management at each of the three levels of an organization - entity, functional unit, and enterprise - is not unique to the banking industry. in the context of business organizations in general, the committee of sponsoring organizations of the treadway commission, or coso, has been engaged in a project to evaluate and improve enterprise risk management, or erm. this effort culminated in the publication last month of an integrated framework for erm. this framework may become a standard for enterprise risk management similar to the way the coso internal control framework has become the benchmark in its area. for those of you not familiar with the new coso framework, let me briefly explain that erm is a discipline that an organization can use to identify events that may affect its ability to achieve its strategic goals and manage its activities consistent with its risk appetite. such events include not only those that may result in adverse outcomes, but also those that give rise to opportunities. when implemented effectively by an organization

stephen grenville : policy dialogue in east asia what are the criteria for determining the number of groups for policy dialogue in east asia? and the criteria for participation? talk by mr stephen grenville, deputy governor of the reserve bank of australia, to the australian national university conference on regional financial arrangements in east asia, canberra, 12 - 13 november 2001. the references for the speech can be found on the reserve bank of australia ’ s website. * * * i want to begin by clarifying the issues, as i see them. if we can define what we are trying to achieve with regional co - operation, then we will be in a better position to determine the nature of the regional groupings needed to achieve this. my brief today is to discuss the relevant criteria for groups which carry out a policy dialogue in east asia. in defining the area of interest, i may widen this brief somewhat, because the sort of regionalism which i hope will develop over time goes well beyond policy dialogue, and indeed policy dialogue in its narrow sense does not seem to me to be the most pressing need. policy dialogue, as it evolved in the post - war period, was largely about macro - economic policy co - ordination, and this was really only relevant for the largest countries – essentially the g3. for the rest of us, this was not a case of policy dialogue, but rather monologue – the g3 did what they could in terms of international co - ordination, and we wore the results, principally in the form of substantial fluctuation in the g3 exchange rates, which was often inconvenient to many. so there certainly remains a major issue of international macro policy co - ordination, and perhaps we might hope to have some input to it from the periphery, but this will not be central to our regional arrangements. there are, however, important areas where regional arrangements have the potential to be very important for the development of policy : these are trade and ( less certain ) exchange rate arrangements. the first of these seems beyond the scope and brief of this paper, so i will leave it untouched : the second is the focus of discussions tomorrow, so that, too, i leave to others. this still leaves important regional policy issues, including the possibility of policy co - ordination in the face of a repeat - or variation - of the 1997 / 98 asian crisis - i will certainly talk about this. but the much more general, wider and perhaps more important issue relates to globalisation