Jul 2014 Financial News

Howai: TT affected by global events

Jul 02, 2014

MINISTER of Finance and the Economy, Larry Howai, yesterday advised bankers and executives in the financial sector that everything which happens in today’s “interconnected” world may have an impact on this country.

He said this was true whether it was such faraway and unlikely events as the rise of the insurgent group The Islamic State of Iraq and Syria (ISIS), which is rapidly taking control of large amounts of territory in Iraq and Syria and on Monday declared an Islamic State on the territory it controls, or the activities of the terrorist group Boko Haram in Nigeria. He said, “Directly or indirectly almost everything that happens anywhere in the world, no matter how far away, impacts our lives here in Trinidad and Tobago. That impact could be in the form of an increase or decrease in energy revenues, travel and trade restrictions, higher or lower food prices.” He added, “Thus we all bear the risk. It behoves us all proactively to take steps toward risk-mitigation.”

Howai made the statements while delivering the feature address at the start of a two day workshop on enterprise risk management (ERM) at the Hyatt Regency Trinidad on Wrightson Road, Port-of-Spain. The workshop was organised by the Institute of Banking and Finance of Trinidad and Tobago.

It will cover such topics as asset quality risk; managing reputational and organisationsl risks; and project finance — evaluating the key risk stages and cash flow coverages.

Howai said the global financial crisis of 2008 was a “particularly spectacular illustration” of the need for risk management, recalling that the mantra “too big to fail” was being popularised even as the companies the catchphrase referred to were collapsing. “We cannot ignore that risks are emerging on every front for business — operational, financial, social, environmental, technical and political. Risk is a natural part of life, and indeed an accepted part of business and financial operations.”He said more than five years after the crisis the financial and financial services industries are still dealing with the issues which emerged during that period, among them a slow and fragile recovery; ongoing uncertainty in the Euro area; regulatory reform and reorganisation of regulatory oversight; stricter capital requirements and imbalanced growth and profitability. However, Howai said what was important was “how we respond to and embrace emerging risks to mitigate consequences to our business and leverage such risks for opportunities for growth and advancement.”

He said that enterprise risk management (ERM) assists organisations in identifying and managing significant risks, “and to then clarify their risk appetite and risk profile.” Referring specifically to the local financial sector, he said government had strengthened regulation “to ensure the sector remains stable and accommodative of growth and economic activity, with the implementation of the Securities Act 2012, Financial Intelligence Unit Act and revisions to the Insurance Bill.”

He said that in future, “businesses should be adequately prepared to respond to evolving dynamics in the financial services industry, including new laws, rules and regulations. At the same time, they should be sufficiently equipped with the necessary analytical capabilities, information technology systems and the right data sets to facilitate their adaptation.”


Source:
By Verne Burnett
Newsday
Wednesday July 2, 2014

http://www.newsday.co.tt/business/0,197049.html