OSFI Priorities for 2014-2017

Anticipating and Responding to Risks Emanating from the Economy and Financial System

Why is this a priority?

Economic and financial conditions have a significant impact on the environment within which financial institutions operate.  A clear understanding of the risks emanating from the economy and financial systems ensures that effective regulatory and supervisory actions are undertaken.

Plans for meeting the priority:

  • Focus on the impact of interest rate conditions on the risk profile of institutions via stress testing; continued monitoring of high household indebtedness and real estate lending.  
  • Respond to recommendations stemming from the International Monetary Fund’s Financial Sector Assessment for Canada. As well, participate in and achieve strong results from ongoing peer reviews by the Financial Stability Board (FSB) and the Basel Committee on Banking Supervision (BCBS), such as the BCBS’ 2014 review of Basel III implementation in Canada.
  • Continue to focus on operational risk, including growing cyber security risk data aggregation and outsourcing risks.

Enhancing Supervisory Processes

Why is this a priority?

Increasing the effectiveness of supervision is a key pillar of the FSB's efforts to reduce risk in the financial system.  In order to remain effective as a supervisor, OSFI must continue to evolve and enhance its supervisory practices in response to changes in the economy and the financial system as well as to meet rising international standards.

Plans for meeting the priority:

  • Review OSFI intervention processes at Federally Regulated Financial Institutions (FRFI) to ensure a more timely response to OSFI’s expectations.      
  • For large complex FRFIs in particular, focus on new supervisory areas such as assessing risk culture, and implementation of risk appetite.    
  • Establish a process to continually review expectations for small institutions, particularly small and mid-sized banks that would consider the impact of guidelines, methodology and supervisory activities and ensure that these are appropriately scaled to size and complexity.
  • Review risk management practices in FRFIs in the area of internal audit and succession planning.

Anticipating and Responding to Risks Emanating from Regulatory Reform

Why is this a priority?

The global regulatory agenda is changing rapidly. A clear understanding of developments ensures that appropriate actions are undertaken by OSFI to maintain an effective Canadian regulatory framework that continues to be responsive to international reforms.

Plans for meeting the priority:

Banking Reforms:

  • Monitor the implementation of banking reforms in other jurisdictions, especially the extent to which they exceed agreed minima, and consider appropriate responses for Canada.
  • Monitor bank responses to global regulatory reforms and adjust, as appropriate, supervisory or regulatory requirements.
  • Support Financial Institutions Supervisory Committee (FISC) partner agencies in establishing a sound resolution framework for major banks in Canada.   

Insurance Reforms:

  • Implement the suite of domestic reforms set out in the Life Insurance Regulatory Framework publication, as well as proposed changes to property and casualty insurance capital requirements.
  • Actively participate in the development of global insurance capital standards. In addition, monitor the implementation of prudential insurance reforms in other jurisdictions and consider appropriate Canadian responses.
  • Develop a separate capital guideline and update the methodology for determining additional capital requirements for private sector mortgage insurance companies.

Pensions Reforms:

  • Support the implementation of Pooled Registered Pension Plans (PRPP).

Accounting, Auditing and Information Disclosure Reforms:

  • Actively support the International Accounting Standards Board in achieving convergence with the Financial Accounting Standards Board. In the event of lack of convergence, assess and recommend any actions that need to be taken with respect to OSFI prudential standards.
  • Ensure that major FRFIs continue to be among the leaders in publicly disclosing information on their financial condition and risk management practices.

A High-Performing and Effective Workforce

Why is this a priority?

Focusing on the learning and development of OSFI employees and enhancing their ability to plan for and adapt to change will allow for continuing to successfully meet OSFI business goals.

Plans for meeting the priority:

  • Deliver internal services, including change management support, to effectively respond to business needs in a timely way while ensuring compliance with OSFI’s values and Government of Canada expectations.
  • Continue to promote the best use of resources, including enhancing OSFI’s integrated planning process and supporting documentation, so that resource gaps (skills, tools & financial) and action plans to mitigate risks can be identified more readily.
  • Continue to actively develop OSFI employees by ensuring that both individual and group learning needs are identified and delivered in a timely and effective way.

An Enhanced Corporate Infrastructure

Why is this a priority?

Continuous strengthening of internal systems, processes, and controls will enable OSFI to work more effectively and efficiently.

Plans for meeting the priority:

  • Complete the current Information Technology Renewal (ITR) program and prepare OSFI to be able to adopt future emerging technologies in support of planned business needs.
  • Continue to develop enterprise-wide information and FRFI data management strategies and frameworks to facilitate informed decision making and efficiently manage OSFI’s corporate records.
  • Continue to strengthen OSFI’s framework of internal controls, including reviewing and improving key internal processes, through a risk-based approach.
  • Define the workplace of the future (physical space, systems, etc.) and develop a plan for achieving it as we enter into new office leases.

For further information on OSFI’s plans and priorities see OSFI’s 2014-2015 Report on Plans and Priorities at the following link:
http://www.osfi-bsif.gc.ca/Eng/osfi-bsif/rep-rap/rpp/rpp1415/Pages/default.aspx