Ranee Jayamaha: Governance, risk management and compliance (Central Bank Articles and Speeches)

As you are aware, the year 2008 has started off with the continuation of some of the challenges that resulted in significant disturbances in world financial markets: the impact of the sub prime market turmoil which originated in the US is still spreading across Europe and other financial markets; the Northern Rock crisis in the U.K. has raised serious regulatory issues; and the large frauds in global banks have highlighted the repercussions of the lack of internal controls and accountability in financial institutions. As in the past, many of these have been due to lapses in governance and risk management practices. Although Sri Lanka’s financial markets have been insulated from these disturbances, they underscore the need for good corporate governance, better risk management and compliance in our financial industry. It is also important for us to learn from the bitter lessons experienced by others as our financial services industry too is tempted to provide low quality credit, which has been the root cause of the subprime issue.