benjamin e diokno : managing risks, sustaining momentum, improving lives speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the launch of financial stability report for the 2nd semester of 2021, manila, 1 february 2022. * * * ladies and gentlemen, friends from the media, good morning. thank you for joining the financial stability coordination council for the financial stability report for the 2nd semester of 2021. a few days ago, q4 2021 year - on - year growth was reported to be at 7. 7 percent, putting the full year expansion at 5. 6 percent. this is a remarkable turnaround from what we experienced in the first year of covid - 19. for financial authorities, we welcome these gains, humbly recognizing that there will always be improvements we can pursue, while maintaining a watchful eye over changing market conditions. in thinking of where our market stands, i am reminded of niccolo machiavelli, the italian philosopher and statesman to whom this quote was first attributed. he once said, and i quote “ never let a crisis go to waste ”, unquote. his idea cannot be more apt than today. while this pandemic has been a heavy burden, it has provided us the opportunity to come together and take collective action. now that we have our growth momentum back, we can pause, to take the opportunity to learn from this crisis. in previous fsrs, we described how quickly we all came together. faced with an unprecedented crisis, we took unconventional measures to respond to an out - of - the - box challenge. in this fsr, we talk about what we have learned from covid. for financial authorities, it is and will always be about the financial system as a whole and that whole has to be appreciated as being more than the sum of its parts. we also talk about how we can be better, addressing some of more immediate challenges that have come up because of covid. it is about the welfare of the filipino, seen through the lens of public health, through access to goods, through socio - economic equity, and through a greener future environment. all of these are in this latest fsr. we invite all of you to access and download your copy which will be available in the websites of the fscc member agencies. as always, we look forward to hearing your thoughts and comments. again, thank

- regulatory - relationships ref # 8609867 v1. 2 page 6 of 7 appointed actuaries play an important and valuable role to both the industry and the reserve bank. we consider the appointed actuary to be a key voice at the table when an insurer is seeking to understand its financial health and future prospects. our review team expects to make best practice recommendations to insurers and appointed actuaries, as well as provide recommendations to our own policy and supervision teams that will feed into our review of the insurance act. the public report of this review is expected to be published in the first quarter of 2020. putting on our ‘ sunday best ’ – closing the conduct gap as already mentioned, earlier this year the fma and reserve bank released a joint report6 called life insurer conduct and culture. we believe that conduct within financial institutions is a contributing factor to customer outcomes, and can result in a gain or loss of trust and confidence in the industry. based on our joint analysis, we found : extensive weaknesses in systems and controls for managing conduct risk, coupled with a lack of governance and management oversight ; a lack of focus on customer outcomes and limited evidence of customers being adequately considered in product design and sales ; that sales incentives were prioritised over good customer outcomes ; a serious lack of oversight and monitoring of intermediaries ; and a poor and inconsistent approach to dealing with complaints and remediating issues. since the report was made public, we have worked with life insurers while they develop their action plans for remediating the issues and mitigating the risks we identified. we strongly believe that all insurers - including health and general insurance – should learn from the review and its findings. this is why we have subsequently written to the boards of general insurers setting out our expectations that they will review the culture and governance within their own firms. a “ nothing to see here ” mentality is not, and never will be, a sensible response to such an array of serious findings in a sister industry. we will be following up with non - life insurers to understand how they are reviewing these issues within their own firms. how a firm monitors and addresses conduct and culture issues will be a part of our ongoing ‘ business as usual ’ supervision with all insurers. we will also monitor insurers to make sure their planned actions are implemented effectively. conclusion the public is demanding that both insurers and regulators play a part in providing greater confidence in