OSFI releases fall update to the Annual Risk Outlook for 2024-2025

Our fourth bulletin provides information about the fall update to our annual risk outlook and shares details about our second quarterly release pilot to be held on November 21, 2024.

Each year OSFI releases our Annual Risk Outlook (ARO), which outlines our perspective on the top risks facing Canada’s financial industry. In the fall, as needed, we release an update to the ARO or the Semi-Annual Risk Outlook (SARO).

In our Annual Risk Outlook released in spring 2024, we highlighted 4 top risks:

• real estate secured lending and mortgage risks
• wholesale credit risks
• funding and liquidity risks
• integrity, security, and foreign interference

While these four risks remain, integrity and security risks continue to intensify and multiply. In particular, the SARO, released on October 2, 2024, highlights:

• risks to operational resilience
• risks related to artificial intelligence (AI)

Operational resilience

Integrity and security risks were discussed in the spring Annual Risk Outlook, and we continue to focus on those risks as key components of operational resilience. We are increasingly concerned with the operational resilience of institutions, particularly with respect to third-party, cyber, technology, and integrity and security risks, including fraud and anti-money laundering.

Artificial Intelligence

Rapid developments in Generative AI (GenAI) have resulted in an increased adoption of AI tools in finance. The use of AI in finance has the potential to deliver significant benefits, but also amplifies some challenges and gives rise to some new ones. One such example is heightened fraud and money laundering activities.

We recently released a report on AI uses and risks at federally regulated financial institutions, in collaboration with the Financial Consumer Agency of Canada (FCAC). This report explores how AI can drive innovation and efficiency while highlighting the importance of managing potential risks.

 Read the SARO for an overview of our actions to address these risks.

Save the date - quarterly release

We would also like to invite you to join us for our second quarterly release on November 21, 2024, from 10:00 a.m. – 10:45 a.m. EST / 7:00 a.m. – 7:45 a.m. PST. Tolga Yalkin, Assistant Superintendent, Regulatory Response, will give remarks and take questions on our latest releases.

That day, the items we publish will include:

• Results of OSFI’s Policy Review
• Minimum Qualifying Rate (MQR) industry letter 
• Revised Regulatory Notice on Commercial Real Estate Lending
• Regulatory Notice on Culture Risk Management
• Final Liquidity and Adequacy Requirements (LAR) Guideline
• Final Mortgage Insurer Capital Adequacy Test (MICAT) Guideline
• Final Life Insurance Capital Adequacy Test (LICAT) Guideline
• Final International Financial Reporting Standards 17 (IFRS 17) Guideline

--> Register for the stakeholder announcement.