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Opportunities for Expanding Risk Mitigation Activities

Opening Remarks
Ursula Schaefer-Preuss
Vice President, Knowledge Management and Sustainable Development
Asian Development Bank

At the Public-Private Round Table on Financing Development - Session II

18 June 2008
ADB Headquarters, Mandaluyong City

Introduction

Ladies and gentlemen,

Good afternoon and welcome back for today's afternoon session.

The next topic on our agenda deals with Opportunities for Expanding Risk Mitigation Activities. As we have learned during this mornings discussion, MDB's have a major role to play in this area, and do so in many shapes and forms – both implicitly and explicitly. With increasing emphasis on public-private partnerships, expansion of non-sovereign financing operations, as well as continued market volatility and the introduction of new risk management approaches by commercial banks under the Basle II Capital Accord, the need for new forms of risk sharing arrangements is probably greater then ever.

Risk sharing, of course, is nothing new to ADB. But explicit risk sharing arrangements, mainly through credit enhancements in form of guarantees or syndications, historically have played a much smaller role compared to ADB's own lending operations. More recently, however, we have witnessed an increased demand for these products, and ADB has responded by redesigning its policies and products and pioneered a number of innovative applications. Yet, they have not been fully mainstreamed. A number of critical challenges remain to be addressed. For example, how to address issues ranging from of moral hazard to incentives, product transparency and harmonization of instruments among different agencies, to name just a few.

Over the next hour or so, we will have the opportunity to exchange views on how to go about those. But first, may I ask Mr. Werner Liepach, Principal Director of ADB's Office of Cofinancing Operations, to give you an overview of ADB's risk mitigation activities. After that the floor will be open for discussions.

Thank you very much.