Toronto Centre provides high quality capacity building programs and guidance for financial supervisors and regulators, primarily in developing nations, to advance financial stability and inclusion. Since inception, Toronto Centre has trained over 28,000 officials from 190 jurisdictions.

Pandemics and Financial Stability (Part 1)
Wednesday, Jul 15, 2020

Pandemics and Financial Stability (Part 1)

This Toronto Centre Webinar will help financial Supervisors and Regulators gain insights and perspectives on COVID-19 and its impact on the global financial system from supervisory experts. This episode features:

  • Dr. David Nabarro
  • Carl Hiralal

Full transcript

March 19, 2020

Babak Abbaszadeh:

Just last week, WHO declared Coronavirus a pandemic. Since then, daily we have witnessed drastic
measurements by global governments in response. We are also literally in shock at our global capital
markets with global effect on the main streets. At Toronto Centre, we're no stranger to crisis
preparedness, but we are pleased to launch our Pandemics and Financial Stability broadcast series.

Babak Abbaszadeh:

In this first episode, we sit down with two prominent experts to cover the public health public policy as
well as the financial supervisor dimensions of this challenge. We circulated their bios of their impressive
careers to you in advance, so I won't read them. They are also posted on our website. I should
emphasize that Dr. David Nabarro has been appointed as Special Envoy of the WHO Director General on
COVID-19 for Europe and North America. David has worked in over 150 counties and has held previous
leadership roles in the UN on projects, including disease outbreaks and health issues.

Babak Abbaszadeh:

Carl Hiralal is the Chair of Toronto Centre's Insurance and Patients Advisory Board and a seasoned
former Senior Supervisor at Canada's OSFI Trinidad Tobago and frequent contributor to the
International Association of Insurance Supervisors.

Babak Abbaszadeh:

I would like to thank our core steady sponsors, Global Affairs Canada, Swedish International
Development Corporation Agency and the International Monetary Fund, without whom we could not
achieve our global mission. Before I start, I know that many of our viewers have questions for these two
experts. You probably see something beneath the screen. Please type your questions in and we have
budgeted some time to answer as many of them as time allows.

Babak Abbaszadeh:

Now we're very privileged to have Dr. Nabarro with us. He's actually in the trenches now and any
minute that we're taking away from him is taking away from the global efforts that he and his colleagues
at WHO are spending here. Without any further ado, I'm just going to talk to you, Dr. Nabarro, first.

Babak Abbaszadeh:

After a slow start, it appears that many world governments are now mobilized and have declared states
of emergency, but it is not clear whether these are coordinated efforts or just one government matching
another's latest announcement and response. My question to you is, is there a need for more global
public health coordination and is relief in sight?

Dr. David Nabarro:

Thank you very much, indeed, and hello, everybody. Just in case you wondered, I am not sitting on the
beach with a beautiful sunset behind me, but just to brighten my day up, I've changed my background.
Otherwise, you would see my sitting room because, like everybody working for the international
organizations here in the border between France and Switzerland, I'm at home. I'm at home because
this area is now in a shut-down phase, and it's in a shut-down phase because of the outbreak.

Dr. David Nabarro:

Now the question that BaBak asked me was about coordination. Let me just say a couple of quick things.
Firstly, this epidemic that's turned into a pandemic, is really a series of outbreaks and those outbreaks
are advancing at an incredibly rapid pace. It's exponentially doubling in scale every two or three days.
Now when you've got something that's really that dramatic in terms of advancement, it's super hard for
authorities to keep pace with it, especially once it expands and has been multiplying in the community
for a number of weeks.

Dr. David Nabarro:

The first point to say is that we've really learned from Southeast Asian countries that very rapid action,
at the beginning, is absolutely key. We're encouraging everybody concerned to get into that mindset.
The gradual imposition of actions, one country after another, kind of domino effect, is not really the
right thing to do. It's being really robust and rigorous from the start. Then the pain and difficulty may be
reduced.

Dr. David Nabarro:

If you keep outbreaks contained and suppressed, then you reduce the consequences. Now the World
Health Organization, second point, is doing its best to coordinate everybody around a common strategy,
but the World Health Organization is only an advisory body. It cannot compel governments to do things
and governments are acting as best they think they can in the economic and societal context.

Dr. David Nabarro:

To my third point, I am absolutely certain that if we're going to lessen the pain and speed the rate at
which societies get on top of this series of outbreaks, in the way that South Korea, China and Singapore
have done, we need much, much better coordination, a coordination that brings everybody up to the
pace of the fastest rather than coordination that slows everybody to the slowest common denominator.
With that, I hand you back to Babak.

Babak Abbaszadeh:

Thank you for that. This morning as I was coming to work, I just noticed that there were 451 deaths in
Italy, which actually surpasses the number of confirmed cases in Canada. It was a record for them, so
your comments are extremely timely. Carl, Dr. Nabarro just gave us a very sobering assessment and lots
to think about. You are no stranger to financial crises. I'm sure you've had to deal with some of them in
your own career. What's different this time?

Carl Hiralal:

Well, thank you for that question and good morning, good afternoon, everyone. Let me preface my
comments by saying that this crisis has significantly upended the manner in which financial institutions
operate on a day to day basis. More importantly, there is great uncertainty over when this will end and
what will be the economic fallout. Overarching all of this is the fact or the evidence that this is a
pervasive humanitarian tragedy as Dr. Nabarro just also indicated. It's different.

Carl Hiralal:

Let me indicate the impact on financial institutions. Financial institutions, as we all know, are no
strangers to dealing with crises such as natural and man-made disasters. In general, their track record is
pretty good, but past disasters were usually localized and occurred over a discreet period of time. This
crisis, this time around, we have a crisis which is multidimensional. It is global. It is unprecedented in
terms of impact and reach in the real economy and the problem is exacerbated by extreme volatility.

Carl Hiralal:

Let me briefly make two more points. The volume of employees working from home today is
unprecedented. Some of the banks, the major banks in Canada, they have up to 50,000 employees
working at home. This is unprecedented. This arrangement, however, is fraught with challenges such as
maintaining client confidentiality, preventing cyber risk, preventing fraud and even potential market
conduct abuses. Operational risks, therefore, is high. Reputation risk could also become an issue for
financial institutions in this operating environment.

Carl Hiralal:

Secondly, financial stability requires the financial system to function in good times and bad times. This
goal could be elusive this time around as the recovery of the economy may be longer than it has been in
the past. We all know that supply chains are disrupted, that international suppliers are unknown and
probably unreliable at this point in time. If manufacturing companies are unable to operate, employees
will be impacted financially and the banks, through loans and mortgage payments, will be impacted. This
is the typical cascading effect that we have in these circumstances. All of this, however, is occurring at a
time when oil prices are declining, which would result in decreased fiscal capacity of many countries to
facilitate recovery.

Carl Hiralal:

To summarize why it's different, at the risk of sounding alarmist, and I'm a regulator and regulators, as
you all know, are paid to worry, this is a risk officer's nightmare as business continuity plans of some
financial institutions most likely did not contemplate the magnitude of this challenge, although there are
many that are up to the challenge. There are no precedents to fall back on and financial institutions will
find it difficult to develop sustainable responses. By extension, regulators could also be challenged
enormously as they grapple with developing action plans and strategies for responding. That is my
comments on this point. Thank you.

Babak Abbaszadeh:

That's sobering. I feel like I didn't even need any coffee this morning. This is just like the two or you are
keeping me awake and for those of you who are in the evening hours, I hope you're not being put to a
nightmare for a night, but this is very interesting. Thank you.

Babak Abbaszadeh:

David, turning back to you, our preoccupation, as I said, was with a lot of poverty reduction in
developing countries, and generally speaking, other issues. Could you give a reflection on this? Talking
about financial stress, what Carl was talking about, is it reasonable to assume that pandemics hit the
most vulnerable communities harshest? If so, what more could be done at the global level to mitigate
the risks and increase awareness?

Dr. David Nabarro:

Thank you very much, Babak. There are some paradoxes here. First of all, the parts of the world that are
being most severely hit right now are the parts of the world that are seen to be wealthier, Europe, and
in a short period of time, North America. Isn't that odd? Normally, we imagine that these kinds of

infectious diseases are going to really create havoc in the poorer countries of the world. I'm afraid the
bad news is that doesn't actually go on. I can't come now to you all with messages of hope and light at
the end of the tunnel right now because having started in China and actually being eventually, after the
most extraordinary effort by the Chinese people and government, it started in China and then being
brought under containment and suppressed, it's now come to Europe, where it's actually affecting some
quite wealthy regions, particularly in Northern Italy and around Madrid and Spain, Northern and Central
France and then it will come, I'm afraid, to other countries in Europe. Then it will be in the United States.
It's there already, but it will grow.

Dr. David Nabarro:

What really concerns me and my colleagues in the World Health Organization, is that this is going to go
into Africa. We have reports today of where it is in Africa right now and it's going to go into other
markets in Asia, Middle East and Latin America. Now at the moment, our advice is really the same for
these places which are just about to get it, and that is please act rapidly, rigorously, robustly because
any delay in a strong early response rightly adds to the magnitude of the response needed later and the
pain associated with that later response.

Dr. David Nabarro:

When you're dealing with an early stage of an outbreak, as is happening in the African countries I
mentioned that are just reporting it, you can manage by swarming round the people who are infected
and curb contacts in a dignified way, isolating them and helping them not to infect others. If you leave it
a week or two with half-hearted measures, then you get these explosive outbreaks and then you have to
impose really strong measurements, including physical distancing of the whole population and
sometimes you have to restrict movements, like what we've got here in France at the moment, a
lockdown.

Dr. David Nabarro:

Who suffers the most when these are introduced? Well, it's pretty obvious, isn't it? It's the people who
don't have savings, who don't have regular employment and who have got challenging domestic
circumstances, possibly debt. For them, it's a question of survival and we've already seen, in some parts
of Africa, that food prices are going up, partly because people are stockpiling, but partly because of
market gouging, so that's going to add to the distress of poor people.

Dr. David Nabarro:

What we're currently preparing everybody for is a really major increase in levels of impoverishment and
all that goes with that and we're saying, anything you can do to prioritize the health functions to
respond quickly, will have two important impacts. One, it will reduce the disease and reduce the
necessity for lock-downs. Two, you will increase public confidence, which in turn may reduce the
amount of volatility of investment that's leading to lowering of equities in stock exchanges. Either way,
public health has to come number one. Otherwise, the poverty impact will be far, far too great and, as
far as I'm concerned, threaten all the gains that have been made in recent years through development
efforts.

Babak Abbaszadeh:

Thank you. I think one observation I have from your comment is, and it was very good that you talked
about the dilemma, the paradox, we are all in it together, rich, poor, old, young. In fact, I'm learning now
that the whole thing about people over 65 being vulnerable is not necessarily iron clad. A lot of cases are
beginning to develop for people under 60 and others who are have serious problems.

Dr. David Nabarro:

Analysis of hospital data from Italy and from South Korea are showing very clearly that there are
younger patients needing intensive care. Sorry. I cut across you. I know you wanted to move to Carl.

Babak Abbaszadeh:

That's okay, but the point being that we're all being urged to do social isolation but in fact, if you think
about it from a higher level, this is bringing us all together as a species, right? It's interesting. This
pandemic, Carl, is transcending national boundaries at an alarming rate with enormous economic
impact. Consumers and industry are affected significantly. Dr. Nabarro touched a little bit on that.

Babak Abbaszadeh:

Given our financial institutions are in the business of risk, one would expect that they should have in
place an effective business continuity plan and risk management, even for the times of a pandemic, to
address the impacts. With this in mind, what should regulators do and how do they get comfort that
financial institutions have taken appropriate steps to mitigate their risks during this difficult time?

Carl Hiralal:

Okay. Thank you. First of all, one of the tenets of risk-based supervision is the capability of regulators to
intervene in a timely basis. In normal times, regulators must be able to continually assess the stability of
the financial system. This is no different during a crisis, except that it is significantly more challenging.
The type of information, the quality of the information and the speed with which that information is
transferred to the regulator, is crucial.

Carl Hiralal:

What do we do? Regulators, therefore, need to establish effective lines of communication with key
people, persons, at their individual financial institutions. Discussions need to occur frequently as
required and this could mean weekly or even daily, depending on the financial institution. Again, this is
the regulator acquiring knowledge and intelligence as to how well the financial institutions are
deploying their BCP and how well they're coping and how effective it is.

Carl Hiralal:

The information needed by regulators from the FI includes, and I will list a number of them. First and
foremost, the regulators need to understand the degree to which boards of directors of their supervised
companies are actively engaged throughout this entire process in supporting management. Just as an
aside, I sit on a regulatory board in the Caribbean and I have been in contact frequently with
management of that regulatory board to determine how they are coping, and this is more than once a
week. That involvement of the board is important.

Carl Hiralal:

Secondly, the effectiveness of financial institutions' BCP and whether they are continually revising it to
deal with rapidly changing circumstances, is important to the regulator. By the way, this also applies to
regulators. They must demonstrate that they are also able to operate during this crisis. In other words, is
their BCP working? The optics here is important for us, as regulators. In addition to that, regulators need
to know the degree to which the employees of the financial institutions are protected, because financial
institutions need to continue to provide services, albeit reduced, to their customers.

Carl Hiralal:

Confirmation is needed by the regulators that critical processes have been identified and are supported.
These are the processes, for example, that in the case of insurance companies and banks that have
pension plans, that annuity payments and pension plans will continue to be made during this crisis
situation because pension payments are going to the vulnerable elements of our society, all of the
people who need these pension funds in order to buy food and medication. Those are the kinds of
critical processes I'm referring to.

Carl Hiralal:

If we look at this in an overall or holistic manner, the regulators need to ensure that the financial
institutions have an effective decision making process in place. For example, are there designated
persons who are empowered to make decisions without any undue bureaucratic burden? Is there a
matrix system at the financial institution involving plans from different departments to discuss problems
holistically? Are the key players in financial institutions taking calculated risks in their decision making
processes, considering that time is of the essence and all relevant information may not be available?
Have the financial institutions communicated to their customers on their revised mode of operation?
Have the financial institutions identified forbearances and have communicated them to their customers,
forbearances such as waiving of penalties for delay of payments, late payments, waiving ATM fees and
those kinds of things.

Carl Hiralal:

My last point that I would want to raise is are there any special consideration given to SME, given that in
normal times, new jobs are created by SMEs. I think those are the comments that I would like to indicate
here but I am really attracted to a comment that Dr. Nabarro just made where he said in these times,
increased food prices could affect the poor more than anybody else. That, to me, is a real life situation
that you have to deal with. Those are my comments on that point.

Babak Abbaszadeh:

That was a very succinct way of summarizing, cataloging the key concerns there. Dr. Nabarro, turning
back to you, you published six COVID-19 narratives since late February. That's February, 2020. That's
how fast this thing is happening. To address this pandemic, I understand you are working on the seventh
one. Could you please give us a bird's eye view of the early lessons that are relevant for our
conversation today? Also, yesterday, when you and I were talking, you were talking about whether this
could be a V or U type of recovery. Could you comment on that for our audience just a little bit, please?

Dr. David Nabarro:

Thank you very much, indeed. Let me start from places where I feel safest, the things that I know most
about, public health and the management of disease outbreaks. I started to get involved at the request
of the WHO, at the end of January, and I looked very carefully at the information coming through from
China. I could see how the Chinese authorities, after a period of uncertainty and I think many of us read
about that in the newspapers and on social media, there was then, in early February, a real recognition
that this was so serious, that the whole apparatus of the Chinese state had to be mobilized to support
Chinese communities, a collective action to identify people with disease and isolate them, to find their
contacts and to quarantine them, to set up good quality health services and make sure all the doctors
and nurses were protected, to do the best possible healthcare and at the same time, to ensure that the
people who were being looked after, were being treated with dignity.

Dr. David Nabarro:

They managed, but they did it also, by isolating Wuhan from the rest of China, isolating Hubei Province
from the rest of China, and then making sure that everybody else in every other province was on the
alert to deal with cases that were imported from Hubei and Wuhan and to basically suppress whatever
started. Really important learning from this was that actually public health matters and having good
quality capacity at the community level matters and that being closely with the people and respecting
them matters, and doing it all super fast and repurposing government to make it happen, matters.

Dr. David Nabarro:

Although the economic momentum feels very bitter when you do it like that, I think that the calculation
by the Chinese authorities, which was picked up by our team from the World Health Organization, was
better to take the bitter medicine in one gulp at the beginning than to take it in drips and drabs over a
longer period. I believe that we've see, from the Chinese experience, that there is a way to deal with this
and there is a way, that there's some hope to come out of the pandemic and out of COVID outbreaks
with a relatively short but significant damage to the economy.

Dr. David Nabarro:

I think, yes, the Chinese economy has taken a huge hit and it may continue to take a hit because we
should not assume that there won't be returns of COVID to China. We're already seeing some evidence
that that's happening. You take the big hit. You expect some subsequent economic damage, but at least
that means that, and now I'm getting to the places that I don't know anything about, Babek, but you
basically, if you're doing it that way, your economic impact is down and then anticipated after a period,
and up again. It's probably a U-shape and it will take some time. It's caused, as I say, big distress to lots
of Chinese. When I say lots, I mean millions.

Dr. David Nabarro:

Just suppose the Chinese government had not done that. Just suppose that they had taken halfway
measure and said, "Well, we're not quite sure how serious this is. Perhaps we'll introduce some social
distancing. We'll tell some people to go into quarantine, but we won't enforce it. We'll slightly ramp up
health services, but we'll do the best we can. We won't be able to [00:29:25] our hospital or build new
hospitals quickly, so we'll manage the best we can with what we've got. Then it would be a different
story. The outbreak would still be roaring in China, really strongly, and instead of having an economic
impact, which is a U, you might have an economic impact which feels a bit more like an L, with very slow
recovery and perhaps even some permanent damage to some sectors, especially if the finance side is
not quite right.

Dr. David Nabarro:

That is the specter that some of the business leaders that I'm meeting are talking to me about now.
They're saying, "If we can't follow the examples of the countries that have been successful and if we let
this thing go on for many months, the rest of this year, perhaps into next year, and it goes on like that,
not just in some geographies but in most of European, North American and perhaps some other regions,
then there's a real possibility of sustained damage to economies, sustained damage to employment
prospects, sustained damage to social fabric.

Dr. David Nabarro:

The reason why I'm saying all this to you is that sometimes political leaders listen more to leaders in the
finance sector and if you can say today, as you're making decisions, "Hey, these public health people,
you know, they might be right, and if we treat this thing seriously from the beginning and get on top of it
quickly, the economic hit might be less. Don't you think you should listen to them?" I hope you'll do that.

Dr. David Nabarro:

This last point is there is no stage where you'll give up on this thing, even when you've got an explosive
outbreak like colleagues of mine are dealing with in Northern Italy, not far from where I am now.
They've learned that if you can maintain the effort and if you can keep mobilizing society, even though
your hospitals are overloaded and your doctors and nurses are totally exhausted and feeling terribly bad
about the choices they have to make, you can push it back. At no point should we give up and the
quicker we can get world leaders to come together and deal with this as a collective force, as a global
problem, whether it's in the G7 or the G20 or in the United Nations, but the leaders have to want to do
it. You can't push them to do it but the quicker that happens, the better it will be for your industry and
the better it will be for people everywhere.

Babak Abbaszadeh:

No, I completely agree with you and I think you can take comfort that the audience you are talking to,
supervisors, regulators, we are a science-based community. We're not like some more leaders that call
things a hoax or things of that nature. The other thing to keep in mind for you is that I've never seen a
press release that praises the financial sector supervisor or regulator. They never get that praise, but
there's all kinds of fingers of blame at them when something goes wrong. This audience is very
seasoned.

Babak Abbaszadeh:

Now Carl, with your permission, I just looked at our questions from the audience. We have about 20
questions from the audience. They're all excellent. It's hard for me to pick, so I'm going to directly go to
them, with the first question to you. While most supervisors and regulatory authorities have likely
invoked their crisis and contingency plans, for those agencies that do not have such plans as of yet, what
advice do you want to give the supervisors now? Concisely, if you could please give us your top of mind
ideas on that?

Carl Hiralal:

First of all, financial institutions which do not have a BCP plan is an issue and should not have allowed to
happen. Nevertheless, in this situation, perhaps all is not lost because this crisis is so different, so
unprecedented that even BCP plans which were put in place ahead of this crisis, are most likely being
drastically revised and drastically changed at the moment. I think the basic answer to this is the BCP plan
needs to be developed and you need to be focused. In other words, focus and finish should be the
modus operandi here.

Carl Hiralal:

They need to identify the critical processes within the company. Those processes need to be maintained
and they need to identify the people who would be required to maintain those processes. They need to
ensure that their employees are well protected and, in addition to that, their regulators need to be in
constant communication with these financial institutions to understand the degree to which they are
under stress. The financial institutions need to mobilize right now and they need to get their boards
involved.

Babak Abbaszadeh:

Dr. Nabarro, this questioner actually named you, so I'm going to go right to you. It speaks to a concern
all of us have because most of our lives seem to be suspended now, right? We have suspended all of our
training programs that are physical [00:35:12]. We're not the only ones in that state, either. We have
seen many actions taken by European and other Western authorities, including border shutdown and
emergency declarations, but even in these conditions, the disease continues its exponential growth.

Babak Abbaszadeh:

Do you think that it should pass a certain amount of time for the outbreak to consume it's potential or
the measures taken later that would be required. If eventually, there should pass a certain amount of
time for the disease to slow down, how much would be your estimate? I guess this is about the function
of time and pressure and as a scientist who is sees with this, what's your general guidance or assurance,
observation or whatever you can provide us, please?

Dr. David Nabarro:

Thank you very much, indeed, Babak. Colleagues, this is a new reality. We're dealing with an unseen
enemy and we have never faced this enemy before. Only three months has this virus being around. As
the new reality hits us all, there are many, many struggles that we each have, struggles that are so
complex that we are often in a state of paradox. We think we've got the answer in our heads one hour
and then an hour later, we're questioning it. Each one of us is having iterations.

Dr. David Nabarro:

I was very interested in a comment that Carl just said about importance of having space to discuss these
issues with our colleagues, with our families, in our communities, because they're not simple. I have to
tell you that, despite the fact that I do public health, despite the fact that I've got access to all the data
that I believe are available in the published and non-published domains, I can't tell you how long this is
going to last for. I can tell you and I will come on saying it, that the pain of individuals and societies,
economies and for nations, is greatly reduced by early action, is greatly reduced by conservative,
rigorous and robust action and that just saying, "We give up," that will be very bad news. We have to
keep on a front foot and some people say, and I don't like using this language, "we're battle footing."

Dr. David Nabarro:

What might be the term when this will come down. One, most obviously, it's up to us and China,
Singapore, South Korea, have shown that it can be done and are showing that it can be done and I
believe they'll be able to hold it. They will struggle. They will periodically have little blips when there are
lots of cases and perhaps, unfortunately, some debts, but at least they know what to do. The speed at
which the rest of the world can organize to get on top of it will determine when it comes down. A
lockdown does not necessarily suppress the disease. It reduces it, but you have to include the public
health measures of case finding, isolation, contact tracing and then quarantining as well. You've got to
keep both sides going. Otherwise, all that happens is you do the lockdown and the numbers come down.
You take off the lockdown and then suddenly, it will rush back again.

Dr. David Nabarro:

You really have to combine the lockdown, which buys you time, with the strengthening of public health
measures. If we do that, then let's just look at China. All the problems were really happening in January
and we're now in March. That's a space of three months. If we get it properly organized, we can get
these curves down, as we call it, the epidemic curves, that's our language, within three months. There is
light at the tunnel. If we don't, then it's like that thing where we're in the tunnel and we can't see the
light at the end. It could take a very long time.

Dr. David Nabarro:

We don't know whether there are lots of people getting the disease without symptoms, creating what
we call herd immunity. If there are, that will be wonderful because then the number of people to infect
will drop and then the thing will reduce naturally, like happens with influenza. We don't know whether,
perhaps as the weather gets hot in the northern summer, that perhaps the transmission will reduce and
the curve will come down. We just don't know.

Dr. David Nabarro:

That's why we keep going on about following the Southeast Asian example and you might get your
curves coming down within three months rather than hoping that we can get some miracle like herd
immunity or like heat or perhaps the other miracle, which is a vaccine because all my friends tell me,
and these are the researchers, that's about a year away. That was a long answer. I know you said to be
short, but there was such a lot in that one, I wanted to be able to give you my logic straight out of mind.

Babak Abbaszadeh:

No, you get an A+ for packing a lot of information in a small space of time, so thank you very much. I
have a comment here from one of the viewers, which I think is very appropriate to read. It says if was
stated that WHO is just an advisory body and can not tell governments what to do. Do you think that
this epidemic is not just the responsibility of governments but for the community, as a whole, that we,
as individuals, have social responsibility if we are going to defeat this virus? I think this echos pretty
much what you were saying.

Babak Abbaszadeh:

One observation I would like to pout on the table is it's just too darned bad that this epidemic happened
just right after the various attempts by some to dismantle the global trade and global architecture that's
happening because the next question talks about coordination of response, global response. A few
questions are touching on that: Where is that coordinated global response? I'd like to preface that by
saying WHO, in my humble view, really kicked ass. They were the ones who were out there. They blew
the whistle. The declaration of pandemic was just last week and a lot of world governments woke up.

Babak Abbaszadeh:

Absent WHO, do you and Carl see a major global coordination in the same way that we saw with the
global financial crisis or some of the other things? Maybe there are and I don't want to say that there
are not, but do you actually see that level of robust energy for people coming together, forming groups
to talk about across boundary issues? I guess any of you can take that. Carl, maybe you want to meet
with that and then we go back.

Carl Hiralal:

Sure. I think to a certain extent, financial regulators globally have come together through their
international organizations such as the BIS, the IAIS, IOSCO and IOPS. This whole issue, this dialogue of
cooperation, has started and its getting better every day. It got started in a very significant way after the
last financial crisis of 2008. I believe the dialogue is there, the communication is there and it's important
that it be effectively handled because many of the financial institutions today operate globally,
particularly where you have regions of the world where you have individual jurisdictions so small that
it's almost impossible for any one financial institution to operate in a manner where it gains critical
mass. Therefore, you have other financial institutions, or what I would say are foreign financial
institutions operating in those jurisdictions. Therefore, once you have that kind of extension, it's
imperative or incumbent upon regulators to talk to each other. I believe the regulatory bodies are ready
for this in terms of cooperation.

Babak Abbaszadeh:

Dr. Nabarro?

Dr. David Nabarro:

Yeah, so I build on what Carl said. Gosh, Carl, I could just listen to you all day. It's just so beautiful, your
wisdom and the way you express it. I worked for 17 years in different roles in the United Nations and I
learned that you have to have leaders of individual nations who are prepared to take the extra effort to
invest in coordination if you're going to be able to deal adequately with these huge issues that cross
national boundaries. One of the best known areas that I was involved in is climate change. There was a
period around 2015, when together with the Secretary General of the United Nations, I was working
very, very hard to make certain that leaders who realized the importance of working together were able
to contribute to collective action on this difficult issue and that led to the agreement that took place in
Paris called COP21, which was a milestone agreement on climate action.

Dr. David Nabarro:

I wasn't just leaders of governments. It was also leaders of businesses, who were super important,
leaders of civil society, leaders in professions. Basically, it's leaders everywhere that we need just
basically to say, "We believe that working together is better than working separately." Of course, for
those of us who are trying to work internationally, it's obvious but it's not always obvious when you're
with an individual country.

Dr. David Nabarro:

When the financial crisis happened, there were lots of questions about whether the international
monetary fund was fit for purpose and I remember so well the work that was done then with some
leaders who are not in leadership positions now, but they were very much then, taking a huge amount
of effort and time to think about how to rebuild the international monetary fund so that it was better
able to pick up the signs of an impending crisis early and then to respond with the kind of stabilizing
efforts that are needed.

Dr. David Nabarro:

Now if leaders actually deliberately seek to unwind, dismantle, global coordination processes, no matter
how hard those of us who work inside the international system try, we get stuck. If there's one thing I'd
like to say to you all, it is please use whatever powers you have to remind those who are in senior
positions that there is no substitute for investing in coordination between national governments in
order that we create the capacity for collectively dealing with existential crises that go beyond national
borders. That's all I've really got to say on that.

Babak Abbaszadeh:

That's fantastic. Carl, I want to give you a daunting challenge. We need to wrap up very quickly because
if we don't wrap up on time, people won't join our Webinar next time. I have a very complex question
and the question is you, Carl, you commented that operational risk is extremely high. Agreed. The bad
actors intent on targeting the financial services sector by conducting cyber crimes, financial crimes, are
and will seize upon this massive destruction, so am apocalyptic scenario. Has this scenario resulted in
known greater levels of global cooperation that you can comment upon?

Carl Hiralal:

Well, first of all, cyber risk has emerged over the last few years as a major risk facing financial
institutions and international regulatory organizations, almost all of them, are seized of the seriousness
of this issue. There is a fair amount of training going on the technology side for regulators, in which I
have to say regulators are attending these things, but I believe the financial institutions, themselves,
have taken this serious, so what we have here is a pairing where the regulators themselves are getting
educated on how to deal with cyber risks, how to deal with technology risks. Because of that, they're
better equipped to analyze and assess the efficiency of which financial institutions themselves are
protecting their systems against cyber risk. I believe this is positive. It's a work in progress, but I believe
both parties are working and I think it's difficult because the criminals always seem to be one step ahead
of you. Therefore, you need to keep up. I don't think you will eliminate it, but you can make their lives
difficult.

Babak Abbaszadeh:

That's excellent. We still have a few more questions left, which we will not be able to get to, because I'm
very anxious to send Dr. Nabarro back to work. As I said, he's in the trenches and that's no joke. A word
of encouragement to our viewers. We would love you to continue with the other Webinars in this series.
In fact, we have scheduled one for Tuesday, 10:00 AM Eastern Standard Time, so Toronto, New York
time, and one on Thursday. You will be getting the notice about these. Initially, a couple of days ago, we
had only about 20 people and as of last night, 300 people had signed up for this Webinar. I think this
morning it was a little bit more, the numbers, so we're very encouraged.

Babak Abbaszadeh:

A tremendous thank you to both our speakers. You exceeded all our expectations. I found this extremely
informative, less dramatic than what we see on CNN and others, but just really to the point. Thank you
very much for giving us the honest truth as it was, as you see it, as you're experiencing it and we will try
to do something with this series in terms of publication with papers, guidance, notes and other things
that would be of help to financial sector supervisors and regulators. Thank you very much and good luck
to you, Dr. Nabarro. Good luck to all of us and let's learn the lessons of this socialized situation to bring
us together closer as a species. Goodnight. Good morning and bless all. Bye, bye.

Dr. David Nabarro:

Thank you very much.

Carl Hiralal:

Thank you.

Dr. David Nabarro:

Stay in touch, please.

Carl Hiralal:

Please. I would welcome that.

Dr. David Nabarro:

Carl, you're great. I'm your fan. I love you.

Carl Hiralal:

Thank you. The same am I of you.

Dr. David Nabarro:

Oh, well, let's keep going. Thank you.

Carl Hiralal:

I think you handled this well.

Dr. David Nabarro:

Thank you very much. Thank you.

Carl Hiralal:

Okay.

Babak Abbaszadeh:

Okay. Bye, bye.

Dr. David Nabarro:

Bye.

Subscribe to receive information about
our programs, events, and Supervisory Guidance