##ot explained the bill market of his time could be pacified. organizational aspects turning to the organizational aspects of risk management, we find both similarities and differences between central banks and other financial institutions. 3 / 7 bis central bankers'speeches starting with the similarities, a generally accepted principle that applies to both is that risk control functions and risk - taking functions should be separated. as a rule, this separation should reach the top decision - making level of the organization. the different business and reporting lines, both those that take risk on behalf of the bank and those that assess and control it, present their views directly to the decision - making level. after the financial crisis, and the unpleasant surprises which were uncovered in a number of investment and retail banks, the value of following this principle has been understood even more clearly than before. the top management must be responsible for ensuring and overseeing a strong risk governance framework, and must be able to carry this responsibility. this requires a systematic approach. it includes a strong risk culture, a well - developed and explicit policy regarding to risk taking and risk management, up - to - date methodologies for measuring financial risks, and well - defined responsibilities for risk management and control functions. an effective risk control function is a key component in the organization. this function is responsible for overseeing risk - taking activities across the institution. the important thing is that it should have the authority it needs. the risk control function should be independent, with sufficient stature, resources and direct access to the board. risk reporting to the board requires careful design in order to convey bank - wide, individual portfolio and other risks in a concise and meaningful manner. reporting should accurately communicate risk exposures and results of stress tests or scenario analyses and should provoke a robust discussion of, for example, the bank's current and prospective exposures ( particularly under stressed scenarios ). a balance should be found between the independence of the risk control function, on the one hand, and smooth horizontal information flows on the other. as emphasized in bis principles for risk management, for example, banks should avoid organizational " silos " that can impede effective sharing of information across the organization. necessary cooperation between the functions should of course never compromise the special independent role of the risk control function. in " ordinary ", for - profit institutions, the main organizational challenge is to reconcile the business orientation of the revenue - generating functions with the caution guarded by the risk controlling function. this balance has to be managed at a high, responsible decision -

the settlement cycle shortening to t + 3. this initiative and other debt market developments have seen the secondary market activity improve with annual turnover increasing from ksh. 84. 14 bn ( $ 1. 05 bn ) in 2009 to ksh. 466. 07 bn ( $ 5. 83 bn ) in 2010. in 2008, the horizontal repurchase agreement was introduced between commercial banks to improve liquidity in the market. the cbk together with the mlf has also moved to diversify bonds portfolio, mobilize a large mass of local and foreign investors to invest in government securities and thus deepening the bonds market in kenya. as a result of these successes, the bond market has attracted private issuers of fixed income securities like corporate bonds and thereby diversified the investment opportunities. bis central bankers ’ speeches iii. the establishment and implementation of the benchmark bonds program : in conjunction with mlf, cbk has spearheaded the establishment and implementation of the benchmark bonds program in 2007. cbk adopted the introduction of a benchmark bond program to address the problem of bond fragmentation and thereby improve liquidity at the secondary market and firm up the yield curve. iv. infrastructure bonds ( ifbs ) issuance : a total of four infrastructure bonds have been issued since 2009. proceeds from these bond issues were specifically meant for financing certain infrastructural projects. these projects include those in the transport sector – e. g. construction of new roads and rehabilitation of old ones. water sewerage and irrigation – e. g. construction of water supply and sewerage systems, water reservoir dams, boreholes and irrigation schemes around the country. energy – e. g. drilling of electricity generating steam wells ( geothermal ), upgrading the national grid system with new transmission lines and expanding the rural electrification project. a debut ifb worth ksh18. 5 bn ( usd231. 25 mn ) was successfully issued in february 2009. the largest successful single ib of usd 395mn issued in august 2010. three other ifbs of total value : usd 807. 5mn issued so far. in 2011 the cbk, in cognizance of the tenets of kenya ’ s vision 2030 of promoting savings among kenyans, successfully issued a debut 30 - year savings development bond. appreciation it is with sincere delight that i commend and highly thank the exiting members of the mlf for their invaluable contributions, support and cooperation without which the aforementioned milestone