The Office of the Superintendent of Financial Institutions says that it will focus on better identifying emerging risks and strengthening the financial system, although it might have to curtail some of its participation international bodies due to budget cutbacks.

OSFI released a document on Wednesday that spells out its plans and priorities for the 2010-2013 period today. It says that the regulator’s long-term priority “remains focused on improving our ability to understand the changing risk environment and using that understanding to adjust our supervisory and regulatory expectations.”

“We are continuing our enhanced international and domestic monitoring, research, and market intelligence gathering and analysis. We are updating our supervisory framework, enhancing liquidity assessment and monitoring practices, and refining the monitoring of risks facing pension plans,” it says, adding that it will also be conducting comparative reviews of financial institutions in key risk areas.

OSFI also stresses that “global issues require global solutions”, and, as a result, it will continue to participate actively in international and domestic discussions to deal with issues arising from global financial events. “We will also continue to promote improved risk management practices including: stress testing methodologies, executive compensation practices, liquidity management, and corporate governance in institutions,” it says.

It will also have to contend with the move to International Financial Reporting Standards, and the adoption of new capital adequacy standards for global banks. “We are continuing to actively participate in international fora to contribute to the development of internationally agreed capital standards for banks. We will continue to review and improve domestic regulatory capital requirements and assessment practices. We will also enhance risk sensitivity of capital requirements in the insurance sector,” it says.

However, in a letter accompanying the plan, OSFI also nots that since developing the plan, “OSFI has had to revisit our budget, in light of the requirement announced in the 2010 federal budget to reduce expenditures during the business plan period”, and that is likely to curtail some of its international involvement. “For instance we will discontinue the assistance provided to supervisory systems in emerging market economies through OSFI’s International Advisory Group, and will reduce involvement in some international committees,” it says.

IE