Canada's Office of the Superintendent of Financial Institutions (OSFI) recently published a draft guideline that sets principles-based expectations for financial institutions to oversee their culture and manage behavioral risks.
In the guideline, OSFI stresses the importance of culture to shaping behavior — and thus to safety, soundness, and reputation. As such, the regulator expects firms to define their desired culture, continually improve culture to support purpose and strategy, and evaluate and respond to behavioral risks.
The document set forth three principal outcomes towards which firms should aim:
In an interview for Starling's 2022 Compendium, Peter Routledge, Canada's Superintendent of Financial Institutions, discussed the philosophy behind OSFI's culture regulation.
"In the culture taxonomy that we have created, diversity of thought, leadership, and group dynamics are examples of areas where we can begin to assess effective culture practices," Routledge said. "Future work includes looking more closely at senior executive compensation structures and related measurement to support and reinforce a culture of integrity and effective risk management at all levels." [Read More]
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