nor shamsiah mohd yunus : crisis preparedness menu for guardians of financial stability opening address by ms nor shamsiah mohd yunus, deputy governor of the central bank of malaysia ( bank negara malaysia ), at the 14th iadi conference on “ crisis preparedness institutional arrangements and coordination, crisis communication and contingency planning ”, kuala lumpur, 28 october 2015. * * * it is a great pleasure to be here amongst the company of distinguished members of the deposit insurers ’ fraternity, fellow supervisors and central bankers. we meet here today, almost seven years, after the collapse of a single firm that shattered conventional wisdom and redefined the “ rules of the game ” for the management of financial system stability. seven years later and counting, the path to sustainable recovery remains unclear. the cumulative impact of reforms in the financial sector also remains to be seen. in such an increasingly unpredictable world, crisis preparedness has become more important. much is already being done on various fronts to prepare us better to manage crises. this has mostly focused on policy reforms, the supporting infrastructure and institutional arrangements. also important however, and much less discussed, are aspects of crisis preparedness that cannot easily be reduced to a pre - defined framework or template for action. these aspects are humility, agility and trust, and this is what i would like to address today. let me begin with a short story. on 10 may 1996, three teams set out to conquer the world ’ s tallest peak, mount everest. due to a combination of factors, including over - confidence, a hostile environment and poor communication, the expedition ended in one of the worst tragedies of the peak ’ s history. rob hall, one of three team leaders of the great expedition, had successfully scaled the mountain numerous times before. underestimating the risks when faced with unstable weather conditions, hall decided to proceed with the climb rather than turning back. he had strong belief that his past successes, which invariably inflated his confidence, sufficiently equipped him for the challenges ahead. this has now become a classic case study on leadership and risk management under extreme conditions. interesting parallels can be drawn in the context of crisis preparedness in the financial sector. over the course of crises history, policymakers and market participants that were involved in every financial bubble were repeatedly afflicted with the conviction that “ this time would be different ”. the majority voice was quick to dismiss rising risks, and contrarian views were often ignored. it

strikes. for us, it is as important to encourage open and honest communications with our counterparts, as it is to have formal arrangements for information exchange. we cooperate with each other in conducting joint surveillance and capacity building initiatives. through these collaborations, we gradually build respect, trust and goodwill, the kind that no framework can hope to manufacture. let me now conclude. in no trivial part due to my mentors, predecessors and colleagues, past crises that affected malaysia were well - managed, leading to speedy recovery with minimal losses to taxpayers, and the equally important structural transformations that followed. clear statutory remits. independent policy making. effective coordination and implementation. sound governance and accountability. building agility and trust. and proceeding with utmost humility. these building blocks and experience accumulated laid the necessary foundation for the bank ’ s work on crisis management, and continue to anchor our efforts to enhance crisis preparedness on various fronts. bis central bankers ’ speeches