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Interview with Il Sole 24 Ore



Interview with Il Sole 24 Ore 3

Interview with Jean-Claude Trichet, President of the ECB, and Il Sole 24 Ore, conducted by Beda Romano, on 31 August 2011, published 2 September 2011
1. A compatriot of yours, Jacques Delors, the former president of the European Commission, has said in recent days that the euro area is “on the brink of the abyss”. It’s a very pessimistic view, undoubtedly coloured by a sense of disappointment. Do you share it?

Interview with Il Sole 24 Ore 4I have great admiration for Jacques Delors. But let me sum up some of my present observations. First, we have a credible single currency which over the last 12 years has kept its value in terms of price stability in a remarkable way in comparison with the previous national currencies in the last 50 years. The solidity of the currency itself is not disputed and our fellow citizens all over Europe are calling on us to continue preserving price stability. Second, the euro area, taken as a whole, is in a better position from a fiscal standpoint than other economies. In 2011, the public finance deficit of the euro area should be around 4.5% of GDP, while in the United States or Japan it will be about 10% of GDP. But we had a very serious weakness in terms of economic and fiscal governance inside the euro area which has been revealed by the global crisis.

2. Well-informed politicians are not hesitating to talk about a possible break-up of the euro area. The weaknesses cannot be denied.

The weaknesses have to be corrected. Loose fiscal policies and insufficient attention to competitive indicators have not been surveyed rigorously and corrected in time. Individually and collectively the European countries have to correct the present situation. Individually by adjusting their domestic policies – as all the advanced economies, including the US and Japan are called on to do – and collectively by considerably reinforcing their mutual surveillance and their governance.

3. On the subject of governance, there’s a discussion in various quarters about the possibility of creating European bonds. Former Italian Prime Minister Romano Prodi has proposed the creation of a fund guaranteed by the gold reserves of countries that would issue bonds to buy back national debt and make new investments.
At this stage, we have the EFSF bonds, which are bonds with a European signature. The main message of the ECB Governing Council to governments is to implement rapidly, fully, comprehensively the decisions taken by the European heads of state and government on 21 July.

4. Are you talking about the decisions taken by the European Council in July, the ratification of which in some countries, such as Germany, is proceeding very slowly?
I will not mention any particular country. All 17 countries are called upon to implement all the decisions taken by the heads of state and government. This comprehensive and quick implementation is important, including for the confidence of our fellow citizens.

5. So the idea of European bonds doesn’t attract you? Some people are convinced that in the current circumstances we need to consider the most innovative and ambitious solutions.
As I already said, it’s important to note that the EFSF is financed through the issuance of bonds guaranteed by the European states. The Governing Council of the ECB considers that it is important that individual countries feel responsible for their own fiscal policies. At the same time, the Council judges it as essential that peer surveillance is conducted in the most rigorous way. Since the inception of the euro, we have called for a major strengthening of collegial governance. And long before the crisis, in 2004 and 2005, we defended the Stability and Growth Pact when it was attacked by the big countries of the euro area. The European Council, Commission and Parliament are working on the development of six draft secondary legislation texts to reinforce supervision of economic, fiscal and competitiveness policies. We are in the final stages of negotiations and I urge the parties to reach an agreement as quickly as possible.

6. A few weeks ago, in Aachen on the occasion of the Charlemagne Prize, you launched the idea of a finance minister for Europe. How realistic is this proposal? When do you think Europe can become a fully fledged federation?
I said that not for tomorrow but perhaps for the day after tomorrow the European Union could be a confederation of a new type, not unlike the United States of America, but with a government of the confederation, including a finance minister. But this depends on our people. The people of Europe will decide what will be the future of their history.

7. Over the past ten years, the ECB has succeeded in maintaining price stability in the euro area. But low inflation has not been enough to avoid the turbulence of these years. In your view, is it enough to monitor inflation? Doesn’t the crisis perhaps show that, in addition to looking at the euro area as a whole, the ECB should also take greater account than it did in the recent past of economic developments in individual countries?
First of all, as you know, the Treaty requires us to maintain price stability in the euro area as a whole, not to monitor the economic policies of different countries. This is the task of the Eurogroup and of the Commission according to the Treaty. And we have delivered price stability, which was our Treaty responsibility. But since the inception of the euro we have constantly asked the governments individually and collectively to live up to their responsibilities. As I said, we fought to defend the Stability and Growth Pact in 2005 when three main euro area countries wanted to water it down. And since then we have been giving the Eurogroup detailed information on the evolution of the competitiveness of member states and we are calling for rigorous monitoring of fiscal and economic policies.

8. In your opinion then, national governments are to blame for the current situation. Let’s talk about Italy. From your perspective, how do you judge the country’s efforts in the eight years of your presidency?
The Italian economy has tremendous potential given the quality of its human resources and its corporate culture. And yet economic growth has been disappointing. For this reason, I believe in particular that structural reforms are necessary to increase the growth potential of an economy held back by too many obstacles – and they prevent it from achieving its full potential.

9. Italy has been the subject of intense market turmoil this summer. In this regard, how do you view the recent package of austerity measures proposed by the Italian government?
These measures decided by the government in its announcement on 5 August are of extreme importance to rapidly reduce public finance deficits and enhance the flexibility of the Italian economy. It is therefore of the essence that the overall goal in terms of the public finance improvement that was announced be fully confirmed and substantiated. This is decisive to consolidate and reinforce the quality and the credibility of the Italian strategy and of the Italian signature.

10. And what about structural reforms? The serious situation in Italy, like the dramatic drifting in Greece, might it not be linked to an obsolete economic structure, not only to the high public debt?
My message is clear: it is essential that all those measures that allow full exploitation of Italy’s medium and long-term economic potential are introduced. Today there is a huge potential that is not tapped as it should be.

11. The message that you sent to the Italian government in early August to urge it to take further restructuring measures has sparked controversy in Italy. Why this unusual decision?
The view of the Governing Council was that the market turmoil at the beginning of the month required a message to be sent to the Italian government. We were seeing a progressive weakening of investor confidence and we felt it would be useful to share with the Italian authorities our thoughts on the most appropriate measures to help restore market confidence.

12. Some commentators have claimed that there was a quid pro quo: new consolidation measures in exchange for a launch of bond purchases in order to lower Italian bond yields.
No. There was no negotiation. We sent our message based upon our analysis of the reasons for the market disruption. We analysed the decision taken by the government. Our decision to activate our Securities Markets Programme (SMP) is designed to help restore a better transmission of our monetary policy.

13. And yet, the purchase of government bonds was probably your most painful and controversial decision in recent years at the helm of the ECB
Even in normal times all our decisions are very difficult. It is not by chance that you preserve price stability for 332 million fellow citizens over almost 13 years as we have done. Now we are experiencing a global crisis – the worst since the Second World War. And in these exceptionally demanding circumstances we had to take non-standard measures for monetary policy reasons. In particular, the decision to supply liquidity in full allotment mode and to purchase securities.

14. But the decision to buy bonds was particularly delicate because of criticism in Germany, worried by any form of debt monetisation, and because it exposed divisions in the Governing Council. Your detractors level an unfair accusation against you: they claim that you will be remembered as the President who caused the bank to lose its independence.
I have just returned from the European Parliament and I can tell you that our decisions were commented on favourably by the members of Parliament, as all journalists could see. Having said that, the Governing Council acts very prudently, also in the use of non-standard measures, so as not to endanger the credibility and solidity of the ECB and of the Eurosystem. Bear in mind that since the crisis erupted in August 2007, our balance sheet has increased by around 77%, while the Federal Reserve’s has risen by 226%, and that of the Bank of England by 200%. In other words, the crisis has caused us to take a number of non-standard steps, but we took them cautiously and always with a view to ensuring a better transmission of monetary policy. Everybody knows as well that we are fiercely independent. The Governing Council has proved its independence through all its decisions and also through its firm and explicit messages to governments on all occasions.

15. President Trichet, you will leave at the end of October after eight years as the head of the ECB. Mario Draghi, the governor of the Banca d’Italia, will replace you. How has the bank that you will pass on to him changed in recent years? Do you have any tips to give him?
Mario Draghi has been a wise and strong member of the Governing Council for many years. He knows the institution extremely well and, of course, was a party to all the decisions we have taken. What matters is the permanence of the institution. I am certain that Mario Draghi will ensure the institution's continuity and credibility over the long term.

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Investing into a more sustainable future: changing businesses from the inside out



Investing into a more sustainable future: changing businesses from the inside out 5

By Shawn Welch, Vice President and General Manager of Hi-Cone Worldwide

As industries across the world are facing unprecedented uncertainty and anticipating the economic implications of the current health crisis, business leaders have the unique opportunity to seize the chance to make lasting, positive changes and re-interpret the business challenges in a positive way – without forgetting or minimising the toll the pandemic has taken. When trying to identify a way forward, the future must be sustainable. We must take this opportunity to find a more sustainable way for businesses and manufacturers to survive.

Environmental and economic concern have only increased the gap on what consumers want – more sustainability – and how much progress businesses can make without risking their viability. However, rather than giving up on ambitious goals, maybe we need to reframe the way we look at sustainability. So far, businesses have tended to react to consumer demands, often without looking into the long-term implications and research-based due diligence one would expect. Therefore, now is the right time to be more deliberate: to continue on the path towards a truly sustainable ‘new normal’, businesses need to consider the bottom line impact more than ever before and truly invest in changing their business models to become more sustainable.

Shawn Welch

Shawn Welch

To meet the UN’s ambitious 2030 Sustainable Development Goals, businesses ultimately must thrive – working towards establishing a circular economy remains crucial. Instead of a linear ‘extract, use, dispose’ approach, materials need to be respected and re-used as many times as possible, which is only possible if products are designed for re-use, re-manufacturing, repair or restarting. After all, any and all consumption comes at a price. In manufacturing, processes draw on resources to produce items that, once they have served their purpose, become surplus to requirements. Yet, to ignore this is to take an incomplete view of sustainability: instead, materials are extracted from waste to re-enter production processes. Reuse and recycling initiatives are central to this and great strides have been made in raising awareness of this need. The full environmental cost of production and consumption includes the choice of materials themselves but also the level of carbon emissions generated, and energy consumed.

Once products and processes have redesigned for a circular approach, this initial investment will often easily be recouped, especially if we start with looking at the facts when starting this crucial process. To make the Circular Economy a focus for any business very often means changing the business model. Here, investing in research and development is vital. In the packaging industry, for example, we are seeing that customers and consumers are increasingly more focused on sustainability, and that surprising changes can unlock societal and business value. Through minimising a product’s carbon footprint or making recycling easier for consumers, lifecycle-assessment-based product redesigns or using recycled plastics instead of larger quantities of cardboard, companies are identifying these more creative options and enjoying the long-lasting benefits that come with implementing them. In any case, leadership is key. A research-driven approach gets everyone on-board and seeing management committing to these goals as part of business plans helps cement these. At a recent Reuters Responsible Business Summit virtual panel, I was part of an interesting conversation. Here, Yolanda Malone, Vice President Global R&D Snacks PKG, PepsiCo, discussed how leaders have to drive the behaviours within the organisation and the tone for the culture. She explained that her sustainable plastics vision is a world where plastics never become waste. Only through putting the mantra of “reduce, recycle, rethink and reinvent” can we bring circular products to consumer. She stressed that, if we don’t reinvent, we will fall back into old habits.

Of course, consumer behaviours play a part and the easier the solution, the more likely consumers will get behind it. End consumers are becoming increasingly conscious of packaging. So, to be truly circular, we need to take into account the entire lifecycle. Mindset change needs to continue to happen. Consumers need to be clear about what their choices are. To achieve this, we must change our businesses from the inside out, allowing for close collaboration inside and outside of our organisations. Other organisations – such as governments and recycling organisations – will need to be involved in businesses’ efforts, multiplying the impact our investments will have. We must address all aspects of sustainability and, for example, have better recycling, a focus on infrastructure and emphasis on consumer education. To recover, reuse and recycle, the R&D must be in place and dedicated to sustainability. Partnerships are important as we, as other leading global companies realise, cannot do this alone. Collaboration is key when investing in a more sustainable, more Circular, future.

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Securing Information Throughout the Supply Chain – Preventing Supplier Vulnerabilities 



Securing Information Throughout the Supply Chain – Preventing Supplier Vulnerabilities  6

By Adam Strange, Data Classification Specialist, HelpSystems 

The financial services sector is experiencing extreme disruption coupled with rapid innovation as established institutions strive to become more agile and meet evolving customer demand. At the same time, new market entrants compete fiercely for customers. Increasing operational flexibility, through the deployment of cloud infrastructure or via digital transformation initiatives, is critical for future competitiveness but it has also driven regulatory and security challenges, particularly around working with suppliers.

That said, the benefits of a diverse, interconnected supply chain are compelling: agility, speed, and cost reduction all weigh on the positive side of the equation, prompting financial institutions to pursue close, collaborative relationships with suppliers, often numbering in the hundreds or thousands.

Weakness in the supply chain

On the negative side is the increased cyber threat when enterprises expose their networks to their supply chain. In our modern interconnected digital ecosystems, most financial organisations have many supply chain dependencies and it only takes one of these to have cybersecurity vulnerabilities to bring a business to its knees.

As a result, breaches originating in third parties are common and costly – a Ponemon Institute/IBM study found that breaches being caused by a third party was the top factor that amplified the cost of a breach, adding an average of $370,000 to the breach cost.

Concern around the supply chain was also evidenced in a recent report we have just issued, whereby we interviewed 250 CISOs and CIOs from financial institutions about the cybersecurity challenges they face and nearly half (46%) said that cybersecurity weaknesses in the supply chain had the biggest potential to cause the most damage in the next 12 months.

But sharing information with suppliers is essential for the supply chain to function. Most financial services organisations go to great lengths to secure intellectual property, personally identifiable information (PII) and other sensitive data internally, yet when this information is shared across the supply chain, does it get the same robust attention?

Further amplified by COVID-19

Financial service organisations have always been a key target for cyber attacks.  Our research showed that since COVID-19 hit, the risk has elevated further, with 45% of the respondents seeing increased cybersecurity attacks during this period. Likewise, hackers are rejecting frontal assaults on well-defended walls in favour of infiltrating networks via vulnerabilities in suppliers.

But financial services organisations must maintain reputations and ensure customer trust. Firms are keen to demonstrate that they are protecting customer assets, providing an ultra-reliable service and working with trustworthy partners. So, what can they do to better protect their supplier ecosystem?

At the very least, they need to ensure basic controls are implemented around their suppliers’ IT infrastructure.  For example, they must ensure suppliers maintain a secure infrastructure with a minimum of Cyber Essentials or the equivalent US CIS certification controls. Cyber Essentials defines a set of controls which, when implemented, provide organisations with basic protection from the most prevalent forms of threats, focusing on threats which require low levels of attacker skill, and which are widely available online.

Likewise, they need to ensure good information management controls are in place and this begins with accurate information/data classification. After all, how can you apply appropriate controls to your information unless you know what it is and where it is?

How ISO27001 helps organisations put in place a data classification process

The international standard on information security, ISO27001, describes the basic ingredients for data classification to ensure the data receives the appropriate level of protection in accordance with its importance to the organisation. It comprises three basic elements:

  • Classification of data – in terms of legal requirements, value, criticality and sensitivity to unauthorised disclosure or modification.
  • Labelling of data – an appropriate set of procedures for information labelling should be developed and implemented in accordance with the organisation’s information classification scheme.
  • Handling of assets – procedures for the handling of assets developed and implemented in accordance with the organisation’s information classification scheme.

Adoption of this methodology will help financial services organisations and their supply chain take a more data-centric information security approach. However, there are essentially four key stages for implementing a data risk assurance supply chain approach and these are:

 1. Approval – in organisations with complex supply chains senior management, vendor management, procurement and information security will all need to support a robust risk-based information management approach. Details of previous incidents and their impact alongside the business benefits will be essential to gain stakeholder buy in.

 2. Preparation – Organisations should start with Tier 1 suppliers and initially identify the contracts with the highest business impact/risk. They should identify and record information repositories and the data that they contain together with the responsible business owners. Define a business taxonomy based on information categories of that data and include supply chain factors such as what information categories are shared.

For example, they need to understand the business impact of compromise against each of the information categories. Have any suppliers suffered security incidents? What assurance mechanisms are in place? Once all this information is collated the organisation can create a data classification policy and define a set of controls for each data category.

 3. Discovery – Select each data category and identify the associated contracts. Then prioritise the data category based on the risk assessment and verify that the data security controls and arrangements for each data category and contract meet the overall requirements. Once complete, hand over the contract for inclusion in the vendor management cycle.

4. Embed process – the overall objective is to embed information risk management into the procurement lifecycle from start to finish. Therefore, whenever a new contract is created there are a number of actions required which embed data risk at each stage of the bid, tender, procurement, evaluation, implementation and termination phases of the contract.

To summarise, organisations should start by researching the information risk and security frameworks such as ISO27001 and others. They should then focus on defining their business taxonomy and data categories together with the business impact of compromise to help develop a data classification scheme. Finally, they should implement the data classification scheme and embed data risk management into the procurement lifecycle processes from start to finish. By effectively embedding data risk management and categorisation into their procurement and vendor management processes, they are preventing their suppliers’ vulnerabilities becoming their own and are more effectively securing data in the supply chain.

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Deloitte: Middle East organizations need to rethink their workforce in the wake of COVID-19



Deloitte: Middle East organizations need to rethink their workforce in the wake of COVID-19 7

Organizations in the Middle East have had to take immediate actions in reaction to the COVID-19 pandemic, such as shifting to remote and virtual work, implementing new ways of working and redirecting the workforce on critical activities. According to Deloitte’s 10th annual 2020 Middle East Human Capital Trends report, “The social enterprise at work: Paradox as a path forward,” organizations now need to think about how to sustain these actions by embedding them into their organizational culture.

“COVID-19 has created a clarifying moment for work and the workforce. Organizations that expand their focus on worker well-being, from programs adjacent to work to designing well-being into the work itself, will help their workers not only feel their best but perform at their best. Doing so will strengthen the tie between well-being and organizational outcomes, drive meaningful work, and foster a greater sense of belonging overall,” said Ghassan Turqieh, Consulting Partner, Human Capital, Deloitte Middle East.

According to the Deloitte report, many organizations in the Middle East made quick arrangements to engage with employees in the wake of the pandemic through frequent communications, multiple webinars where senior leaders addressed employee concerns, virtual employee events, manager check-ins, periodic calls and other targeted interactions with the workforce.

The report also discussed how UAE and KSA governments have reexamined work policies and practices, amended regulations and introduced COVID-19 initiatives to support companies and the workforce in the public and private sectors. Flexible and remote working, team-building and engagement activities, well-ness programs, recognition awards and modern workspaces are among the many things that are now adding to the employee experience.

Key findings from the Deloitte global report include:

  • Only 17% of respondents are making significant investments in reskilling to support their AI strategy with only 12% using AI primarily to replace workers;
  • 27% of respondents have clear policies and practices to manage the ethical challenges resulting from the future of work despite 85% of respondents saying the future of work raises ethical challenges;
  • Three-quarters of leaders are expecting to source new skills and capabilities through reskilling, but only 45% are rewarding workers for the development of new skills; and
  • Only 45% of respondents are prepared or very prepared to take advantage of the alternative workforce to access key capabilities despite gig workers being likely to comprise 43% of the U.S. workforce this year according to the Bureau of Labor Statistics.

“Worker well-being is a top priority today, and similarly to the rest of the world, companies in the Middle East are focusing their efforts to redesign work around well-being by understanding workforce well-being needs,” said Rania Abu Shukur, Director, Human Capital, Consulting, Deloitte Middle East.

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