Corporate Governance and Banking Activity

Liberalization and the volatility of financial markets, increased competition, and diversification expose banks to new risks and challenges, requiring the continuous innovation of ways to manage business and its associated risks in the order remain competitive. The increasing market orientation of banks has also necessitated changes in the approach to regulation and supervision. The responsibility for maintenance of the banking system and markets is being redefined, in one country after another, as a partnership among a number of key players who manage various dimensions of financial and operational risks. This approach reconfirms that the quality of bank management, and especially the risk management process, are the key concerns in ensuring the safety and stability of both individual banks and the banking system as a whole.