with both independent judgment and inside knowledge. lawyers can offer both. third and finally, try to promote diversity and inclusiveness in the organizations where you work. i have seen too many examples of supervised banks that managed their risks poorly because they approached decisions with limited experience, insight, and perspective. in my few months so far as general counsel at the new york fed, i am increasingly mindful of the value of cognitive diversity and inclusiveness within the bank ’ s legal group. former prosecutors may view an enforcement matter differently than former defense lawyers. a regulatory lawyer who studied economics might not have the same insight as a lawyer whose background is in political science. a compliance officer may spot a problem in our policy that a regulatory lawyer would not have considered. managers — myself included — whose tenure at the bank spans decades, may not see shortcomings in communication or organization that are glaring to newer arrivals. when different views are brought to the table, risks are better understood and better decisions get made. as you progress in your careers, i encourage you to seek out other views. one way to do this is to expand your professional network to lawyers in other countries. we are likely to face similar problems and it can be enlightening, as my meetings this week in beijing have been, to learn from each other about possible solutions. conclusion the circumstances of modern corporate practice demand increased attention to risk and professionals mindful of managing risk with a view to promoting broader organizational and public purposes. whether or not you practice law, the virtues of issue spotting, listening to your clients, and speaking up will serve you well in your professional careers. they are invaluable tools for the task of risk management — a shared task of corporate officers, and one that extends beyond professional bailiwicks. i wish you all the very best of luck as you embark on your careers. i would be happy to take a few questions. 1 james bergin, erin kelly, lev menand, thomas noone, brett phillips, joseph sommer, joseph tracy, shawei wang and jennifer wolgemuth assisted in preparing these remarks. 2 see michael power, the risk management of everything : rethinking the politics of uncertainty ( 2004 ), 37 – 38 ( “ afunctional explanation for the phenomenon suggests that the emergence of a systematic, generic and broad approach to risk management is a rational response to the fact that the environment of individuals and organizations, indeed the world, has become genuinely ‘ more risky

s problem. sometimes i worry, however, that this phrase — “ own the risk ” — has become overused and can itself give rise to risk. to be clear, clarity of roles and responsibilities with respect to risk management is critical. business managers should not be able to outsource accountability for risk management to others. still, i wonder if it is time to retire the phrase “ own the risk ” or at least be more thoughtful about its use. if a business manager is told that she “ owns the risk, ” she may feel empowered to ignore or otherwise shut out other key stakeholders and control functions. after all, if she truly owns the risk, then why does she have to listen to anyone else? this is obviously wrong. lawyers and compliance professionals, for example, should be part of an ongoing conversation about risk management. or, conversely, if those lawyers and compliance professionals do not themselves share some stake in the risk, they may not feel that speaking up or challenging a position by the business line is worth it. after all, the business line “ owns the risk ” and they ( the lawyers or compliance officers ) do not. what ’ s more, certain types of risks, in certain types of contexts, do not fit neatly into the “ own the risk ” model. reputational risk is an example. firms often discover, to their dismay, that reputational risk cannot be neatly contained within one business line, or even within one organization. in a sense, it would be better to think of certain types of risks as shared, with shared accountability, rather than owned. in short, it is important to remember that risk management is a means to an end. who “ owns the risk ” is not as important as clearly understanding how that risk may inhibit an organization from fulfilling its purpose or achieving its goals, and clearly understanding how that risk is being managed. that does not mean that responsibility should be unattributed or entirely diffuse. rather, responsibility for risk should not be parsed so finely that employees forget the purpose of managing risk in the first place. understanding the client i promised at the outset that i would talk about the role of lawyers in risk management. first and foremost, lawyers must advise on the law. a colleague of mine likes to say that lawyers must always remember the reason why they are in the room — to advise on the law. to do so, of course, lawyers must know what the law says. 4 / 7 bis central bankers'speeches