In a letter published last month, Canada's Office of the Superintendent of Financial Institutions (OSFI) laid out plans to issue a principles-based, outcomes-focused culture risk management guideline for public consultation in late 2022. OSFI also sought comments on the proposed outcomes that it takes to reflect effective culture risk management.
Culture-related risks threaten sound decision-making, prudent risk-taking, and effective risk management, OSFI warns, and can weaken an institution’s financial and operational resilience. As such, OSFI will expect Federally Regulated Financial Institutions (FRFIs) to establish and maintain a robust approach to managing and overseeing culture risks. The approach includes attention to: Leadership; Compensation, People Management & Incentives; Accountability & Ownership; Risk Mindsets & Behaviors; Group Dynamics & Decision-Making; and, taken together, a firm's Resilience.
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