OSFI statement on the Financial Stability Board’s publication of Sound Practices for Responsible Adoption of Artificial Intelligence

The Office of the Superintendent of Financial Institutions (OSFI) welcomes the publication of the Financial Stability Board’s (FSB) Sound Practices for Responsible Adoption of Artificial Intelligence (Sound Practices).

OSFI endorses the Sound Practices. They set out a proportionate approach to enabling the benefits of artificial intelligence (AI) while managing the risks it can create. The 12 practices address organization-wide governance and management of AI throughout its lifecycle. They are supported by practical case studies.

AI creates opportunities for financial institutions to improve efficiency, strengthen risk management, and better serve customers. But it can also amplify existing risks or create new ones. These can include operational, technology, cyber, third-party, model, data, and governance risks. At the same time, institutions face the risk of falling behind if they fail to adopt AI at a sufficient pace.

The Sound Practices reinforce the importance of clear accountability, effective human oversight, sound data governance, and controls proportionate to the materiality and risk of each AI use case. They complement OSFI’s own guidelines, which set principles-based expectations that apply to the adoption and use of AI. Those guidelines include:

• Corporate Governance Guideline
• Integrity and Security Guideline
• Guideline B-10: Third-Party Risk Management
• Guideline B-13: Technology and Cyber Risk Management
• Guideline E-21: Operational Risk Management and Resilience
• Guideline E-23: Model Risk Management

OSFI will continue to monitor how AI is changing the risk environment and the operations of financial institutions. Since 2022, OSFI has worked with the Global Risk Institute through the Financial Industry Forum on Artificial Intelligence (FIFAI) to deepen understanding of AI-related opportunities and risks. OSFI also issues Technology Risk Bulletins to draw attention to emerging technology risks and sound risk-management practices.

OSFI’s risk-based approach supports the responsible adoption of AI while helping protect the resilience, integrity, and security of Canada’s financial system.