” is responsible but everyone is connected to the event. clarity of responsibility is i hope unobjectionable. but this is not clarity in the sense of facilitating witch hunts. rather, i see clarity as an appropriate allocation of responsibility, as important to creating the right incentives for behaviour and leadership, and of course in areas like remuneration. in the senior managers regime, responsibility at the highest level covers both executives and non - executives. but, of course, they are different and always will be. there is much commentary, that the response to the crisis has muddied the responsibilities of executives and non - executives, with the burden on the latter increasing. i think there is no doubt that a greater formality is emerging around roles and responsibilities, and i ’ m afraid the burden of work for non - executives has risen, we can ’ t hide from that. an effective board is at the heart of good governance, ensuring that the appropriate policies are in place in respect of safety and soundness and good conduct. we at the pra have a strong interest in supporting good governance and the work of board members to deliver it. an effective board is one which understands the business, establishes a clear strategy, articulates a clear risk appetite to support that strategy, oversees an effective risk control framework, and collectively has the skills, the experience and the confidence to hold executive management rigorously to account for delivering that strategy and managing within that risk appetite. in view of the important role of boards, and the work on governance under way, today we have published for consultation a supervisory statement on the responsibilities of boards. we recognise that this is a hugely important issue, and so we thought it was sensible to set out our thinking for comment as a precursor to a statement of our expectations. the statement clarifies our expectations of boards and indicates some of the elements of good governance to which we expect to pay particular attention in assessing how well firms are run. it draws on our regulatory experience and the lessons of past firm failures – including building society ones – and will help boards to understand how we reach our judgments on governance. the statement is not intended to be a comprehensive statement of good practice. boards have other sources for that, such as the corporate governance code produced by the financial reporting council or the basel corporate governance principles for banks. the statement underscores the collective responsibilities shared by board members. as such it complements the individual accountabilities which we are introducing through the senior managers

mortgage bonds. because of its triple - a credit rating, few of those buying the insurance asked aig for any collateral. 13 that had two consequences. first, as its prospective losses on mortgage bond insurance increased and its own credit downgraded, aig was suddenly required to put up $ 40bn of collateral. as it scrambled to find that collateral, it was forced into firesales of assets. second, as doubts grew about aig ’ s creditworthiness, questions were raised about who had bought the insurance and was therefore now exposed to uninsured losses on mortgage bonds. the confidence effect rippled through the system. today, these problems have been dealt with. complex networks of derivative exposures have been stripped back through increased use of central counterparties. no longer must doubts about one counterparty raise questions about many others. 14 and derivative exposures must be collateralised properly every day. 15 over $ 1trn more collateral is now held against derivative exposures than it was before 2008. cunliffe, c. ( 2018 ), ‘ market - based finance : a macroprudential view ’, asset management derivatives forum, dana point, california, february, available here. mcdonald, r. and paulson, a. ( 2014 ), ‘ aig in hindsight ’, federal reserve bank of chicago working paper, no. 2014 - 07, october. this is an example of how concentrating risk in a network can actually reduce aggregate risk. see financial stability report, november 2017. for centrally cleared derivatives that requirement is in place today. requirements for margin on uncleared derivatives are currently being introduced and will be completed by 2020. all speeches are available online at www. bankofengland. co. uk / speeches no longer must questions about a counterparty ’ s creditworthiness lead to a sudden increase in its collateral requirements. it is not something that is called for suddenly in a stress. collateral is always there to compensate not just for the market value of the derivative position at the time of the default but also additional losses that may be incurred in closing out or replacing the position. but consistent with our duty to consider the future as well as the past, we are now diving to search for new hazards that could lurk beneath the surface in this area. with collateral now dealing with questions about the solvency of counterparties, our focus is on what its much greater use means for resilience of markets. as governor carney has observed : “ collateral