risk - based supervision focuses on strategic and operational risks. strategic risk supervisory objective in strategic risk supervision, supervisors have to ensure that financial institutions have efficiently managed their it resources and are prepared for the future development of core businesses. supervisory areas therefore, to achieve such objective, supervisors will assess risks that may arise in the following areas. policy perspectives since enterprise activities require information from it to meet business objectives, effective it strategic planning is mandatory. the strategic plan refers to how to utilize it in an organization. it must be aligned with and enable the enterprise to take full advantage of its information, thereby maximizing benefits, capitalizing on opportunities and gaining a competitive advantage. as such, it policy, plan and procedure are the concentrated areas for supervisors to examine. we anticipate a financial institution's policy to cover all necessary areas pertaining to it activities including contingency plan, security, and out / in - sourcing. in addition, the policy should cover new product issuance such as internet banking and e - money. the process of formulating, implementing and maintaining of such policies should be considered. a continuous risk assessment and monitoring should also be part of an area of examination. management support and oversight it is ultimately a responsibility of a financial institution's board and management to extend governance to it and provide the leadership, organizational structures and processes to direct and control the enterprise. management must monitor to ensure that it resources are properly managed to promote business objectives. it governance during the last few years, financial institutions have increasingly invested in technology infrastructure to improve their internal processes and servicing capabilities. investment in technology infrastructure normally involves huge amount of funds and other resources. technology also carries risks, which can adversely affect financial institutions if not properly managed. financial institutions need to understand the strategic importance of it, manage it to effectively deliver value to business, and mitigate risks arisen from the use of it. it governance focuses on how financial institutions make the best use of their invested technologies. it is a high - level it control framework related to the formulation of it strategies, the management of it processes to deliver value, the performance measurement, and the management of it - related risks. we believe that effective it governance process will enable financial institutions to effectively utilize their technologies to meet business'expectations and to add value to their business. in that way, it will truly help the organizations to improve competitive advantage, customer satisfaction, cost efficiency, and ability to grow and innovate the business. eventually, it will help

a result of the catching - up process, the accession countries will probably find their equilibrium real exchange rates increasing in the years ahead. 3. as inflation rates in some accession countries are still considerably different from those in the current eu countries, the exchange rate regime must also take account of the risk of higher current account deficits and of competitiveness. in the transition period from eu accession to joining emu, efforts must therefore focus on the consistency of exchange rate strategy and macroeconomic policy. participation in the exchange rate mechanism is only appropriate if pegging the exchange rate more closely to the euro is in line with the general macroeconomic situation. in my opinion, the european exchange rate mechanism is an adequate way of preparing for adoption of the single currency. this mechanism can help to limit exchange rate fluctuations in a credible multilateral system, without preventing a certain degree of exchange rate flexibility. however, it should be noted that there may be cases, in which even the broad bands of erm ii may not be wide enough to accomodate the necessary exchange rate adjustments during the integration process. this may be due, for example, to liberalisation measures or persistent changes in the relative see frankel, j. ( 1999 ), “ no single currency regime is right for all countries or at all times ”, nber working paper no. 7338, cambridge. see von hagen et al. ( 2001 ), “ sustainable regimes of capital movements in accession countries ”, presented at the bundesbank conference held in eltville on 26 - 27 october 2001. see wolf, h. ( 2001 ), “ exchange rate regime choice and consequences ”, presented at the bundesbank conference held in eltville on 26 - 27 october 2001. prices. it is therefore best to wait until the initial impact of eu accession is over before taking part in erm ii. this is the best way to avoid speculative attacks. this is particularly true of the present free floating currencies, whose proponents consciously stress exchange rate flexibility or the advantage of an autonomous monetary policy. premature participation in the exchange rate mechanism could prompt the foreign exchange markets to “ test ” this mechanism. in countries which have already maintained a fixed exchange rate peg to the euro for some time, it is argued that the current high degree of integration is “ relaxed ” by accession to erm ii, in other words by adopting an exchange rate band. this could lead to the risk of distortions. but in this context it should be taken into