Companies need to refocus efforts on risk management, better governance and responsible leadership
The unfolding financial crisis underscores the need for improved risk management and more globalised regulation, heard participants at the World Economic Forum’s latest session on the risks to global growth.
‘We are in a crisis of confidence. There is just no confidence in financial institutions in the market,’ commented William Rhodes, chairman, president and chief executive officer, of Citibank NA, Citi, USA.
Rhodes argued that the financial rescue package currently under negotiation in the US Congress must go forward. The financial system has to be recapitalised not just in the US but around the world, he said.
Rhodes reckoned: ‘One of the things that must come out of this crisis that did not come out of previous crises is some form of international accounting standards. We really need a set of internationally accepted regulatory norms. We are too tied together in a globalised world.’
The call was echoed by Liu Mingkang, chairman, China Banking Regulatory Commission, People’s Republic of China: ‘What we must have is international cooperation. The current crisis is global in nature but regulation is still based on the national.’
Liu told participants that the Chinese economy is ‘quite okay’, though growth may come down from 11% to 9%.
China saw the US mortgage policies as ‘ridiculous’, Liu said.
In the end, blame for the meltdown should rest with the leaders in the financial sector. Companies need to refocus efforts on risk management, better governance and responsible leadership, Liu reminded participants.