Federal financial regulators are planning to step up their supervisory efforts as they look for new ways to grapple with financial system risk.
The Office of the Superintendent of Financial Institutions (OSFI) published its Priorities for 2014-2017 — which are the same as last year, except for its new emphasis on enhancing its supervisory processes. OSFI says that this new priority reflects an increased focus on this area.
“Increasing the effectiveness of supervision is a key pillar of the Financial Stability Board’s efforts to reduce risk in the financial system,” it says, adding that, to that end, OSFI must bolster its supervisory practices “in response to changes in the economy and the financial system as well as to meet rising international standards.”
The regulator spells out a number of initiatives it’s planning in order to meet that challenge. For one, it will review the intervention processes at federally-regulated firms “to ensure a more timely response to OSFI’s expectations.” It will also review firms’ risk management practices in the area of internal audit and succession planning.
For large complex financial firms, it says it will focus on new supervisory areas, such as assessing risk culture, and implementation of risk appetite. Whereas, for small firms, it will establish a process to continually review expectations and consider the impact of guidelines, methodology and supervisory activities and ensure that these are appropriately scaled to size and complexity.
The list of other priorities includes: addressing risks emanating from regulatory reform, dealing with risks from the economy and financial system, and continuing to improve its own workforce and its corporate infrastructure.