their effect on the firm ’ s financial condition and performance, cash flow, and earnings potential. with regard to securitizations, derivatives, and other innovative risk - transfer instruments, traditional accounting disclosures of a company ’ s balance sheet at any one time may be insufficient to convey the full impact of a company ’ s financial prospects. equally important are disclosures about how risks are being managed and the underlying basis for values and other estimates that are included in financial reports. unlike typical accounting reports, information generated by risk management tends to be oriented less to a particular time and more to a description of the risks. to take an example from the world of banking, where the discipline of risk management is relatively well developed, an accounting report might say that the fair value of a loan portfolio is $ 300 million and has dropped $ 10 million from the previous report. however, the bank ’ s internal risk report would show much more extensive information, such as the interest rate and credit quality of the assets and the range of values the portfolio would take under alternative future scenarios. the user of a risk - management report could determine whether changes in value were due to declining credit quality, rising interest rates, or sales or payoffs of loans. corporate risk officers have developed other types of reports that provide information on the extent to which the total return in a particular line of business compensates for the line ’ s comprehensive risk. on an enterprise basis, a reader of such a report can determine whether the growing lines of business have risk exposures that tend to offset those in other business lines - thereby resulting in lower volatility for the earnings of the corporation as a whole. complex organizations should continue to improve their risk - management and reporting functions. when they are comfortable with the reliability and consistency of the information in these reports, they should begin disclosing this information to the market, perhaps in summary form, paying due attention to the need for keeping proprietary business data confidential. not only would such disclosure provide more qualitative and quantitative information about the firm ’ s current risk exposure to the market, it would help the market assess the quality of the risk oversight and risk appetite of the organization. a sound risk - management system in a complex organization should continually monitor all relevant risks - including credit, market, liquidity, operational, and reputational risks. reputational risk, which recent events have shown can make or break a company, becomes especially hard to manage when off - balance - sheet activities conducted in a

projections that, if realized, would constitute a notably better performance than we have seen so far this year. 1 fomc participants continued to see the economic recovery strengthening over the medium term, with the central tendency of their projections for the increase in real gdp picking up to 3. 5 to 4. 2 percent in 2013. at the same time, the central tendencies of the projections of real gdp growth in 2011 and 2012 were marked down nearly 1 / 2 percentage point compared with those reported in april, suggesting that fomc participants saw at least some part of the first - half slowdown as persisting for a while. among the headwinds facing the economy are the slow growth in consumer spending, even after accounting for the effects of higher food and energy prices ; the continuing depressed condition of the housing sector ; still - limited note that these projections do not incorporate the most recent economic news, including last friday ’ s labor market report. bis central bankers ’ speeches access to credit for some households and small businesses ; and fiscal tightening at all levels of government. consistent with projected growth in real output modestly above its trend rate, fomc participants expected that, over time, the jobless rate will decline – albeit only slowly – toward its longer - term normal level. the central tendencies of participants ’ forecasts for the unemployment rate were 8. 6 to 8. 9 percent for the fourth quarter of this year, 7. 8 to 8. 2 percent at the end of 2012, and 7. 0 to 7. 5 percent at the end of 2013. the most recent data attest to the continuing weakness of the labor market : the unemployment rate increased to 9. 2 percent in june, and gains in nonfarm payroll employment were below expectations for a second month. to date, of the more than 8 - 1 / 2 million jobs lost in the recession, 1 - 3 / 4 million have been regained. of those employed, about 6 percent – 8. 6 million workers – report that they would like to be working full time but can only obtain part - time work. importantly, nearly half of those currently unemployed have been out of work for more than six months, by far the highest ratio in the post - world war ii period. long - term unemployment imposes severe economic hardships on the unemployed and their families, and, by leading to an erosion of skills of those without work, it both impairs their lifetime employment prospects and reduces the productive potential of our economy as