. second, was recognition that the policy approach had failed and this meant that it needed to be replaced. i would pinpoint the location of the flaw in the policy approach to regulation as lying in the presumption that the instinct for self - preservation of well - governed firms would be sufficient to protect the system, thereby allowing light - touch regulation. ( the presumption was mistaken : the banks were not well - managed from the risk point of view ). this is not an approach or a flaw that was unique to ireland, of course, and many in the room will recognize and recall the global rhetoric – political and otherwise ) that rationalized such an approach ( though in ireland i believe that it was accompanied by a greater degree of deference than was necessarily entailed in the mind - set that brought light - touch financial regulation to the world ). bis central bankers ’ speeches actually, the approach might work reasonably well in an environment where risk aversion in the market is high, the incentives to avoid institutional failure are large and the system ’ s access to funding is limited. but in ireland the approach presided over a property price and construction boom fuelled by the globalised financial market on a scale exceeding that of anywhere else except iceland. at some point, common sense should have kicked in and generated a pragmatic regulatory override. in fact, there was an effort in ireland to impose supervisory discretion through a capital surcharge on developer loans, but it was too timid, too late and based on inadequate information. third, i won ’ t repeat what has been written already about the quantitative insufficiency of the supervisory resources that were brought to bear on banking in ireland. this prevented a sufficient flow of information that could have made top decision makers aware not only of the possibility that there could be a property bust – everyone knew that this was not only possible but inevitable, with only the scale in doubt – but also the degree to which property loans were insufficiently secured against anything other than the bubble - inflated property itself. well, all three of these challenges needed to be addressed : the first has been a slow and painful process of refining loss estimates in the face of what has been a surprisingly gradual erosion of wishful thinking, an inadequate information base, a protracted slide in asset prices and in the economy generally ( exports apart ). large capital injections have been needed to cover now - projected losses. the third has been met with a substantial increase in staffing

, 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