learn that despite an increasing involvement of risk managers in business decision - making, poor alignment between decisions that are taken by business leaders, and the intentions of senior management and the board, continue to persist in many organisations. a common reason for this is the absence of, or a poorly defined risk appetite framework. and very few organisations, if any, have gone further to articulate their risk appetite for managing innovation specifically. this has important implications for risk managers. we cannot expect risk managers to be very helpful to business leaders who have explicit growth and revenue targets to meet, if risk managers are not themselves guided by a risk appetite that is equally well - defined. at best, risk managers end up being tolerated as a necessary evil and constraint to innovation, rather than valuable partners to significantly lift a firm ’ s growth potential. today, risk managers are tasked to identify and mitigate risks in day - to - day business decisions. this inherently assumes that risk managers in the office are going to be always better at identifying risks in new business ventures than the individuals on the ground who are charged to lead and execute them. in a fast changing world, this is particularly problematic because it is more likely to place unrealistic expectations on risk managers. of greater concern, it may not permit timely responses to emerging risks. it also slows the pace at which a firm can learn from and adapt their risk tolerance to new ways of doing business as it gains experience. the path forward therefore lies in making business leaders better risk managers. the role of risk 2 / 5 bis central bankers'speeches managers in turn should evolve from directly supporting individual business decisions, to continuously pushing for more clearly defined risk appetite frameworks through engagements with the board, senior management and business leaders ; by ensuring that management guidance is consistent with the risk appetite ; and communicating the risk appetite in precise and specific terms across the organisation. organisations will rarely get it right the first time. but encouraging a strong focus on providing as much clarity as possible in setting the risk appetite for the organisation sets the tone and internal conditions for ongoing improvements in risk culture ; it provides better alignment between business decisions and a firm ’ s risk tolerance ; and ultimately, delivers a better balance between taking on too much risks and inhibiting the kind of innovation that we depend on to build successful businesses and economies. achieving these outcomes is more urgent than we might think. in an online poll by marsh last year, 91 % of risk professionals agreed that understanding technological innovation is crucial to stay at the

appropriate. building the necessary legal and institutional framework to support the development of good corporate governance practices within the capital and financial markets is therefore an important part of the process. among the various measures initiated includes the law that provides the statutory framework to protect the interest of the depositors, customers and shareholders as well as the prudential framework to promote financial stability. this includes the legal provisions prescribing the maximum permissible shareholding limit to avoid concentration of ownership. there is also a restriction on extension of credit to related parties to avoid conflict of interest, as well as a limit on the lending to single customer. other measures include the issuance of specific guidelines on the role and responsibilities of directors and the creation of various board committees. greater emphasis is also accorded to the role of independent directors, minimum qualifications of such directors and their compensation to ensure sufficient independence to act in the best interest of the institution. in the area of shariah governance, guidelines have been issued on the governance structure of the shariah committee in the islamic financial institutions. the guidelines define the role and responsibilities of the shariah committee, which extends beyond endorsement of shariah - compliant products to also ensure that the operations of the islamic banking institution complies with shariah requirements at all times. the guidelines also prescribe the fit and proper criteria for members of the committee, and places emphasis on the independence of the committee to report directly to the board and to accord to the board the responsibility to ensure that the shariah committee can effectively discharge its duties. in addition, members of the shariah committee may not sit on the shariah committee of other islamic banking institutions as well as on the shariah advisory council of the central bank so as to preserve the confidentiality and avoid potential conflict of interests. to promote greater financial transparency and disclosure and to safeguard the interests of investment depositors, guidelines have also been issued on the model financial statement of the islamic banks. in this connection, islamic banking institutions are required to provide disclosure of information, among others, on the segregation of income and expenses from the categories of instruments including the investment of unrestricted investment deposits, restricted investment deposits and investment of shareholder's funds. islamic banking institutions are also required to disclose information on the profit equalization reserves. in addition to disclosure requirements in the financial statement, a standard framework for the calculation of the rate of return for islamic banking operations has been introduced. the framework requires islamic banks to clearly segre