The US economy hovers on the cusp of recession, some banks are struggling to recover from serious blows to their credibility and earnings, segments of the credit markets remain unsteady notwithstanding signs of improvement and the world economy is slowing in the face of unprecedented headwinds from rising commodity prices.

These circumstances require that all parties, private and public, reflect on their responsibilities to address decisively the challenges they present. The answers to the financial sector problems that command the headlines lie in a mix of four inter-related actions: a reinvigorated commitment by individual companies to sound risk management and its integration with business objectives, raising capital as needed and reinforced by market discipline; collective efforts to bring in­dustry practice as a whole up to leading standards; improvements in market incentives and structures to address inefficiencies and distortions; and ad­justments in supervisory and regulatory incentives to reinforce moves towards strengthened risk management and prudent business practice.