##bly again. in canada, governments have focused fiscal efforts on emergency relief, wage support and subsidy programs to protect canadians and keep workers connected to employers. federal agencies have also helped companies with a variety of credit support programs. the extensions of the wage subsidy and credit programs are now supporting recovery. the bank of canada has contributed to the recovery effort by keeping credit flowing and by providing considerable monetary stimulus. with core funding markets seizing up in march and april, the bank launched a series of asset purchase programs to restore market functioning. these programs worked. today, financial markets are functioning well. we also cut our policy interest rate to its effective lower bound and provided extraordinary forward guidance indicating that interest rates will be very low for a long time. this commitment has been reinforced with large - scale purchases of government of canada bonds. this quantitative easing program is working to reduce the cost of borrowing for households and businesses. credit is flowing, and the financial system is acting as an important shock absorber during this crisis. as bold as these policy responses have been, a full recovery from the pandemic will take a long time, and many risks remain. how well all of us — individual canadians, businesses, the health care system and governments — manage these risks will be a key factor in everyone ’ s well - being. the biggest risk is the future course of the pandemic itself. the risk that we could be contracting and spreading the virus is something we can, and must, all manage responsibly. for that, we should be guided by our public health officials. risks to the recovery you won ’ t be surprised that my focus today is the financial risks of the pandemic. history — particularly the knock - on effects of severe recessions — can help us assess these risks. we can also look at the impact of natural disasters and extrapolate to the whole economy. for example, bank staff have published a paper about the 2016 wildfires in fort mcmurray, alberta. 1 the parallels are instructive. then, as now, we saw a rapid stop in economic activity caused by a sudden shock. then, as now, much of the lost ground was regained quickly. but the 2 / 5 bis central bankers'speeches episode left economic scars that took a long time to heal. one of the lessons from fort mcmurray is that households must remain able to manage income losses. this is particularly challenging for highly indebted households that dedicate a large share of their

tiff macklem : from covid to climate — the importance of risk management remarks ( delivered virtually ) by mr tiff macklem, governor of the bank of canada, at the global risk institute, 8 october 2020. * * * introduction thank you for including me in this birthday party — the global risk institute ( gri ) is 10 years old. i ’ m proud to say i played a small part in its birth and chaired its board of directors for four years. so, while i may be less than objective, i ’ m very pleased to be here to celebrate gri and the important role it plays in supporting sound risk management in our financial services industry. before highlighting several financial system risks that confront us today, let me start with a few words about the birth of gri. celebrating 10 years of gri imagine the economy is beginning to recover from the worst global recession since the great depression. you ’ ve seen unprecedented financial market volatility, with large parts of the market freezing up. while canada has managed the crisis better than many countries, a collapse in oil prices, weak foreign demand and overwhelming uncertainty are all weighing on the canadian economy. needless to say, this scenario does not require much imagination — we are living it. but this scenario also describes canada in 2009, as we began pulling out of the global financial crisis. and it describes the circumstances of gri ’ s birth. in 2009, a number of us met in ottawa to discuss why canada had fared relatively well through the financial crisis and how to keep this advantage. the question many international colleagues asked was how did canada, with its financial system deeply integrated with the united states, survive the crisis with no bank failures or bailouts? as much as we wanted to think that we were smarter or more prescient, the truth was more humbling. we had had our own financial failures in the 1980s and learned some hard lessons. the creation of the office of the superintendent of financial institutions helped make sure that we didn ’ t forget those lessons. as a result, as we headed into the global financial crisis, our capital standards were higher than global minimums, we had a cap on leverage, and we had invested in sound supervision and fostered a prudent — some would say cautious — risk culture. our cautious nature is not usually celebrated. we often beat ourselves up for being too risk averse in canada. but by 2010, sound risk management was looking more like a competitive advantage for