##evate ethical or reputational concerns to appropriate levels of management without fear of retribution. reputational and legal risks pose major threats to financial services firms because the nature of their business requires maintaining the confidence of customers, creditors, and the general marketplace. importantly, legal and reputational risk can negatively affect the profitability, and ultimately the viability, of a financial firm. enterprise - wide compliance program a strong compliance program is an integral part of the risk - management function. for the reasons i will discuss, the best practice in complex financial firms is to conduct risk management on an enterprisewide basis. as a result, compliance activities should be managed on an enterprise - wide basis as well. traditional risk management has focused on quantifiable risks, such as credit and market risks. recent events have demonstrated the need for greater focus on the risks that are harder to quantify - that is, operational, legal, and reputational risks. indeed, legal and reputational risks are significant risks facing some financial firms today. the compliance area is critically important in identifying, evaluating, and addressing legal and reputational risks. given the significance of these risks, a strong enterprise - wide compliance program is a necessity for complex financial firms. a well - executed compliance program can also highlight operational problems. as an integral part of an enterprise - wide risk management, an enterprise - wide compliance program looks at and across business lines and activities of the organization as a whole to consider how activities in one area of the firm may affect the legal and reputational risks of other business lines and the enterprise as a whole. it considers how compliance with laws, regulations, and internal policies, procedures, and controls should be enhanced or changed in response. this approach is in marked contrast to the silo approach to compliance, which considers the legal and reputational risks of activities or business lines in isolation without considering how those risks interrelate and affect other business lines. the silo approach to compliance has prevailed for far too long in financial firms. we are overdue for a paradigm shift to an enterprise - wide compliance structure as we also shift to enterprise - wide risk management. why is an enterprise - wide compliance program so important? recently, in an interview with the wall street journal, the independent board chairman of a prominent mutual fund company involved in the market - timing scandal identified as one of the firm ’ s compliance breakdowns the bifurcation of compliance responsibilities within the firm. that is, no one had the 25, 000 - foot

r basant roi : treasury and risk management address by mr r basant roi, governor of the bank of mauritius, at the financial markets association of mauritius workshop on treasury and risk management, 10 september 2003. * * * president and members of the financial markets association of mauritius ladies and gentlemen good morning. thank you chairman for the invitation to briefly address this gathering of financial market participants this morning at the opening ceremony of the treasury and risk management workshop. as far as i recall, this is the first time that such a workshop is being organized by your association for the benefit of its members and for professionals involved in treasury and risk management. since the breakdown of the bretton woods system in the early 1970s treasury management has assumed an increasingly greater importance in our economic life. with the globalisation of financial markets treasury management has become more demanding than before. until five years ago treasury management was not assigned the same importance that ought to have been given by corporate bodies in mauritius. it is absolutely essential that in today ’ s world efficient treasury management occupies a seat of importance in the management of enterprises. i congratulate your association for having taken the initiative to hold this workshop. i strongly believe that we should keep ourselves abreast of the latest developments in asset and liability management, risk management techniques and derivative instruments. this workshop is positively a first step forward. i would first and foremost like to make an observation. treasury management is not specific to banks and other financial institutions. it does concern all of us who are in the business of managing financial resources in a globalised financial market. enterprises producing goods and services, exporters, importers or any other economic agent that has got to manage its finance necessarily requires expertise in treasury management. in 1999, i was surprised to learn that an exporter with a turnover of over rs2 billion did not have any expertise at all in managing its own finance. in a world economy characterized by stiff competition, every enterprise needs to be good in treasury management. in the last few years i have stressed a lot on good corporate governance as the basis for best business practices and highlighted the urgency for restructuring and consolidation of individual firm so as to enhance micro - economic efficiency. traditionally much of the knowledge and skills of professionals in the wholesale financial markets has been learned on the jobs. this approach has varied from the simple “ sit, watch and learn ” approach to the sophisticated mentoring system used by some large financial institutions. today treasury operations have grown into one of the key administrative areas of financial