Audit of Supervisory Processes – Internationally Active Insurance Groups, Canada Mortgage and Housing Corporation – Management Action Plan

Recommendation

As per audit report.

Planned actions to support the recommendation

Individual milestone should be focused on results and demonstrate how they address the recommendation. For long-term actions, interim controls should be identified to outline how the risk will be mitigated.

The number of milestones may vary based on the actions required.

Target milestone completion

Each item must have its own milestone completion date. It is suggested to use ends of quarters and fiscal years (ex. “Q4 2022-2023”) rather than specific dates.

Accountability

The individual accountable for completion – usually the person with budgetary authority over the area.

Target overall completion

The overall completion date should be aligned with the final target milestone date.

Recommendation 1 (Medium risk)

Management should develop a consolidated process that streamlines resource planning and enables continuous consideration of evolving and emerging risks.

Planned actions to support the recommendation

The Teams and Supervision Sector are focussed on making decisions driven by our risk appetite. This will include aligning our planning with OSFI’s formally defined risk appetite and cascading that to the Supervision Sector (led across OSFI by ERM). The completion of the Supervision Sector RTF is estimated to be July 2023, per ERM.

Milestone 1

For Fiscal 2023-2024 an interim planning process was developed, per a test and learn approach. Once the supervision RTF is developed, the impact on the supervisory planning processes (including emerging risk considerations) will be reassessed and adjusted accordingly.

Milestone 2

Longer term, with the development and roll-out of the new Supervisory Framework, and the approval of the Supervision RTF, a planning approach will be finalized. Relevant policy instruments and processes will be updated including approaches to risk-based planning. Training/info sessions will be provided to Supervision staff.

Target milestone completion

• Milestone 1: Q3 2023-2024 (planning for fiscal 2024-2025)
• Milestone 2: Q2 2024-2025

Accountability

Head, Supervision Methods, Standards and Controls (SMSC)

Target overall completion

Q2 2024-2025

Recommendation 2 (High risk)

Management should develop risk assessment guidance that enables the effective integration of both FRFI and industry-level perspectives when performing risk assessments.

Planned actions to support the recommendation

Milestone 1

The interim planning process for Supervision is intended to integrate BRC, ARO and idiosyncratic risks. The process will continue to be enhanced throughout fiscal 2023-2024 and will consider alignment with the Supervision RTF once it is finalized.

The Business Risk assessment in the new Supervisory Framework will provide an opportunity for the Strategy, Risk and Governance Sector to provide Supervisors with a direct link to the BRC risks. Details are under development. Training to all Supervision staff will include the approach related to Business Risk.

Milestone 2

Develop an Interaction Model for LS teams and specialists that integrates roles and responsibilities for the development of risk assessment tools.

Target milestone completion

• Milestone 1: Q3 2023-2024 (planning for 2024-2025 cycle)
• Milestone 2: Q2 2023-2024

Accountability

• Milestone 1: Head, SMSC
• Milestone 2: ED’s RAH and RAIH

Target overall completion

Q3 2023-2024

Recommendation 3 (High risk)

Management should establish operational guidance for the design and implementation of key supervisory processes to support consistency for the IAIG teams.

Planned actions to support the recommendation

Operational guidance should be consistent across Supervision and will be impacted by the rollout of the new Supervisory Framework.

Milestone 1

Development of minimum procedures to align with the rollout of the new Supervisory Framework. Training to all Supervision staff will be incorporated in the SFR Training.

Milestone 2

There is currently an intention to develop a “Supervisory Handbook” in coordination with the Policy Architecture Renewal initiative, however that team is currently being staffed.

In the interim, a proposed plan will be developed to prioritize key supervisory processes for updating/development, in line with the finalization of the new Supervisory Framework.

Target milestone completion

• Milestone 1: Q4 2023-2024
• Milestone 2: Q1 2024-2025

Accountability

Head, SMSC

Target overall completion

Q1 2024-2025

Recommendation 4 (Medium risk)

Management should establish documentation and file management standards to ensure all supervisory activities are adequately documented, and ensure these standards are regularly updated.

Planned actions to support the recommendation

Guidance should be consistent across Supervision. Documentation and files management standards will be impacted by the rollout of the new Supervisory Framework, and for file management by the move of eSpace to the cloud.

Milestone 1

Baseline documentation standards will be developed as part of the rollout of the new Supervisory Framework. Training/info sessions will be provided to Supervision staff.

Milestone 2

Longer term, with the development and roll-out of the new Supervisory Framework, relevant policy instruments and processes will be updated and will incorporate timeframes for review/updating. Training/info sessions will be provided to Supervision staff. A plan will be developed to identify and prioritize the approach.

Milestone 3

The impact on file management standards has been recognized by SMSC with the rollout of the new Supervisory Framework. Efforts will need to be coordinated with other areas in OSFI. SMSC will develop a plan, including an implementation schedule for the development of file management standards.

Target milestone completion

• Milestone 1: Q4 2023-2024
• Milestone 2: Q4 2023-2024
• Milestone 3: Q1 2024-2025

Accountability

Head, SMSC

Target overall completion

Q1 2024-2025

Recommendation 5 (Low risk)

Management should establish standardized reports and dashboards in Vu, which incorporate key supervisory processes, and enable on-going monitoring at different levels of management.

Planned actions to support the recommendation

Vu will be significantly impacted with the rollout of the new Supervisory Framework. Proposed metrics identified for monitoring and reporting have been presented to the Supervisory Framework Renewal Steering Committee. Vu 2.0 has taken these into consideration.

Milestone 1

Vu related monitoring and reporting should be consistent across Supervision. Given the transition timelines to Vu 2.0, reporting will not be available until after the effective date of April 1, 2024. Training/info sessions to Supervision staff on the new Supervisory Framework will include Vu 2.0 components.

Target milestone completion

Milestone 1: Q1 2024-2025

Accountability

Head, SMSC

Target overall completion

Q1 2024-2025