OSFI Consults on Approach to Address Operational Risk and Resilience
OSFI issued a letter to the federally regulated financial institutions seeking their views on certain aspects of its approach to the operational risk and resilience framework. One aspect OSFI is seeking views on is how it can position its perspective on operational risk and resilience within its principles-based guidance framework (including Guideline E-21). Views are also being sought on ways to address connections to related risks within the OSFI approach to operational risk management and operational resilience; the related risks include technology and cyber risks; third-party risk; model risk; and culture, compliance, and reputational risks. Stakeholders can submit comments until September 10, 2021.
BCBS published guidance in March 2021 on operational risk and resilience and OSFI, as a BCBS member, had participated in the work that led to the publication of the revised principles for sound management of operational risk and the new principles for operational resilience. OSFI believes that the revisions to the principles for sound management of operational risk strengthen BCBS guidance on operational risk management while the principles of operational resilience introduce the concept of operational resilience. Earlier, on December 15, 2020, OSFI had concluded a consultation process on its September discussion paper titled "Developing financial sector resilience in a digital world," which highlighted certain aspects of operational resilience. OSFI views operational resilience as an important objective of operational risk management and believes that operational resilience encompasses a number of risk management practices and capabilities; these include articulating risk appetite and setting risk tolerances for operational risk; identifying and analyzing critical operations, interconnections, and interdependencies; using scenarios and testing to assess resilience capabilities; and preventing, responding, adapting, recovering and learning from operational disruptions. While the existing Guidelines and Advisories of OSFI cover many of these areas, there are opportunities to strengthen its guidance expectations to enhance operational resilience at financial institutions, including both deposit-taking institutions and insurance companies. As part of implementing any guidance on operational risk and resilience for financial institutions, OSFI will consider whether certain elements of this guidance could also be relevant to federally regulated pension plans.
Related Links
Keywords: Americas, Canada, Banking, Insurance, Pensions, Operational Risk, Operational Resilience, Guideline E-21, Third Party Risk, Cyber Risk, Model Risk, Technology Risk, OSFI
Previous Article
FSB Reports on LIBOR Transition, Urges Entities to Take ActionRelated Articles
EU Agencies Update LCR Rule and Macro-Prudential Policy Recommendation
The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).
EBA Publishes Regulatory Standards to Identify Shadow Banking Entities
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.
OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities
The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.
EBA Proposes Standards to Support Secondary NPL Markets
The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).
EBA Issues Standards for Crowdfunding Service Providers Under ECSPR
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.
EU to Amend Credit Risk Adjustment Rules; ESAs Submit Queries on SFDR
The European Council published a draft Commission Delegated Regulation to amend the regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Securities and Markets Authority (ESMA) published a paper that examines the systemic risk posed by increasing use of cloud services, along with the potential policy options to mitigate this risk.
MAS Amends Notice 635 and Issues Second Proposal on Green Taxonomy
The Monetary Authority of Singapore (MAS) published amendments to Notice 635, which sets out requirements that a bank in Singapore has to comply with when granting an unsecured non-card credit facility to individuals.
EC Consults on PSD2 and Open Finance; EU Reaches Agreement on DORA
The European Commission (EC) published a public consultation on the review of revised payment services directive (PSD2) and open finance.