Tomorrow’s Capital Markets Investing in what we value – not risking our future Patricia Cleverly Director of Research, Strategy and Policy, Tomorrow's Company

Governance and stewardship go hand in hand  Tomorrow's Company defines governance as “the procedures and practice associated with decision-making, performance and control, which provide structures for and satisfy expectations of accountability.”  We define stewardship as "the active and responsible management of entrusted resources now and in the longer term, so as to hand them on in better condition."  Stewardship is therefore a joint responsibility between boards and owners

The ‘triple context’

Capital markets for a sustainable, prosperous & equitable world. “ Ensuring that we are not investing our money only to end up in a miserable world and investing in what we value to secure the well-being of us all.” Tomorrow’s Capital Markets

 There is a growing momentum for change  Change needs to be created and owned by those in the system and those who are responsible for the system  Interventions need to be carefully judged, and require both a systemic and collaborative approach

Our vision for tomorrow’s capital markets  A wider view of value  Savings are channelled into investments which create wealth and secure well-being  Focus on stewardship  Aligning skills and linking targets and incentives to the needs of clients and beneficiaries  Balance between long-term investments and need for liquidity  Ensuring the ‘casino’ economy does not threaten the ‘real’ economy

The changing risk landscape... “ The defining characteristic of our age is increasing connectivity… Increasing connectivity means growing complexity… This complexity is leading to increasing systemic risk… Latent systemic risks are prevalent in many domains... Systemic risk is not simply financial, environmental, or biological. Nor can it be confined to infrastructure or social risks. It extends across all these domains and must be dealt with in an integrative manner.” The Butterfly Defect: How Globalization Creates Systemic Risks, and What to Do about It by Ian Goldin and Mike Mariathasan

The changing risk agenda for organisations... ‘Roads to Ruin’, Cass Business School on behalf of Airmic Causes that make companies especially prone both to crises and the escalation of a crisis into a disaster… ERM strong at managing financial and operational risk… …but now needs to be supplemented by deep consideration of other underlying behavioural and organisational risks.

Tomorrow’s risk leadership... …is about delivering risk resilience and business performance  integrated approach to risk  defining the appropriate risk appetite for the organisation and ‘risk culture’  an executive voice of risk Tomorrow's Corporate Governance: Tomorrow’s Risk Leadership

 Strategic partnership  Executive leadership  Culture  Organisational capability Tomorrow’s risk leadership... Experience and qualities required to fulfil these requirements

 Courage  Communication  Integrity, ethics & values  Credibility  Organisational and stakeholder navigation Tomorrow’s risk leadership...