Daiwa Securities Group Annual Report 2012 Maintaining Financial Health 21 Businesses that consume a great deal of capital or place a heavy  burden on liquidity will be more tightly controlled and financial com- panies will have to build the most appropriate portfolio of businesses  based on the assumption that regulations will continue to tighten. Our new Medium-Term Management Plan responds to the  current trend towards tighter financial regulation. The Daiwa  Securities Group’s financial strategy under the new plan addresses  issues such as how to secure appropriate levels of capital adequacy  and liquidity. It pursues highly effective risk management. The  general business strategy focuses on client asset-based businesses  that manage the assets of customers, such as bank deposits and  investment trusts, and on brokerage businesses that reflect the  flow of orders from customers. In this way, the business plan  emphasizes stable earnings and capital efficiency. to prevent the Group from obtaining unsecured loans for a period  of one year. The Group can boast an extremely solid financial base,  and the systems we have set up for controlling capital adequacy  and liquidity should be able to fully comply with any further tighten- ing of financial regulations in the future. We will continue to refine  these structures. Although the businesses that the Group conducts carry with  them a multitude of inherent risks, constant monitoring of risk  throughout the Group will allow us to maintain a healthy financial  base and earnings structure. As noted above, global financial regu- lations are likely to place even greater importance on capital effi- ciency. The Daiwa Securities Group is responding to this trend by  introducing risk management structures and procedures that can  control market risk and credit risk at appropriate levels and minimize  operational risk in the future. Nobuyuki Iwamoto Deputy President COO and CFO Daiwa Securities Group Inc. At the end of FY2011, the Daiwa Securities Group had a consoli- dated capital adequacy ratio of 27.4% (based on the Basel 2.5  standards)—a very high level relative to those of other major financial  groups. In addition, the Group has already established a liquidity  management structure to regulate the liquidity coverage ratio in  accordance with the Basel Committee on Banking Supervision.  Stress tests are conducted on a daily basis in order to confirm the  condition of our liquidity portfolio. Furthermore, the results of these  stress tests showed that the liquidity coverage ratio remained well  above 100% in every stress test. This indicates that we would be  able to maintain business continuity even if market conditions were 