donald joshua jaganathan : enterprise risk management harnessing disruption opening remarks by mr donald joshua jaganathan, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the institute of enterprise risk practitioners ( ierp ) annual conference 2017 “ enterprise risk management – harnessing disruption ”, kuala lumpur, 23 may 2017 * * * it is my pleasure to have the honour of addressing you this morning. i would first like to take this opportunity to congratulate the organisers for successfully gathering an array of distinguished speakers to share their broad - ranging and invaluable experiences. the breadth of the programme over the next few days reflects how vast the area of enterprise risk management ( erm ) has evolved, and how much there is for risk managers today to discover, learn and master. in my speech this morning, please allow me to share my thoughts on risk management, amid the so - called “ age of disruption ”. technology and risk management amongst all ‘ disruptions ’ witnessed thus far, perhaps none have been as forceful and impactful as technological disruptions. take the smartphone, its use has permeated almost every aspect of our daily lives and has become almost like another limb for some of us. i ’ m no longer woken up by an alarm clock, nor do i read the papers on “ paper ” or take photos on a camera. in the palm of my hand i hold a music player, internet browser, gps navigator, torchlight, and compass, even a wallet in more and more places. with a couple of taps i can hail a cab, and monitor my home cctv, or buy any number of goods from across the world, which might, in the not too distant future, be delivered to my doorstep by a flying drone. given how extensively technology has altered our world today, being technology savvy has become a crucial requirement for risk managers today. in what seems like a blink of an eye, companies like uber, waze and airbnb which barely existed a decade ago have become household names. now valued in the billions, they are a source of income for thousands of people across the globe, and are shaping our modern economy in a myriad of ways. technological savviness is crucial for two reasons. first, technology can be harnessed to improve business operations and enhance risk management. secondly, it allows us to quickly identify and respond to new sources of risks emanating from technological developments. the potential of technology in

failures of in - house accountants and of external auditors to caution boards of directors of financial institutions on a number of vitally important issues even when the issues are clearly driving them to the edge of a cliff. a few years before this particular event, the bank for international settlements had already come up with the cooke committee report, referred to as the basel i nowadays. i had expected any accountant present there to have already taken cognizance of the report. sadly, an accountant, seated in the crowd, listened to me – restlessly and visibly quite irritated. when i was over with my very brief intervention, it was question time. unhappy with my remarks, he tirelessly gave a lengthy expose on the origin of the word audit, which i approvingly found scholastic, but ended with a strong conclusive statement that it is not the duty of auditors to caution board directors of financial institutions on, 1 / 4 bis central bankers'speeches for example, their deteriorating prudential ratios. i later learned that the accountant had spent most of his professional life in a car dealer ’ s warehouse. this narrative is illustrative of how many of our accountants had failed to recognize how fast the auditing profession was evolving and how critically important are their roles in an economic system. i am more inclined to believe that, today, our accountants are very much aware that there are more differences, indeed very many important differences, than similarities between auditing a corner shop and a financial institution. when a corner shop goes bankrupt for whatever reason, it ’ s not news. the owner or owners of the shop and the creditor or creditors, if any, are the only ones who are the losers. when a financial institution goes bankrupt, it ’ s headline news. the differences of importance and of implications for a society cannot be much clearer. if the financial institution is systemically important, the entire industry, the economy and the society as a whole bear the brunt of losses, in one way or the other. we have been witnessing for a decade how the banking industry across the world has been forced to reconstruct its balance sheet at the same time. lord william rees - mogg has put it fittingly that, “ it is like the married couple who both feel chilly at night when they only have a single bed blanket on a double bed. everyone is trying to maximize their cash take from everyone else. ” i need not elaborate on how the process of economic development is arrested and the economic