On February 28, the Office of the Superintendent of Financial Institutions (“OSFI”) published for consultation a Draft Culture and Behaviour Risk Guideline (the Draft Guideline).
OSFI outlines that : “Culture can influence sound decision-making, prudent risk-taking and effective risk management, which can materially support or weaken the resilience of Federally Regulated Financial Institutions (FRFIs)”. As such, OSFI’s expectations for FRFIs are embedded in a set of principles, notably:
Desired culture and expected behaviours should be designed to align with the purpose and strategy of the FRFI and governed through appropriate structures and frameworks.
Leaders, at all levels, should consistently promote and reinforce the desired culture and expected behaviours through their words, actions and decisions.
Talent and performance management strategies and practices should promote and reinforce the desired culture and expected behaviours.
Compensation, incentives and rewards should promote and reinforce the desired culture and expected behaviours.
FRFIs should proactively monitor for, assess, and act to address risks related to culture and behaviour that may influence their resilience.
Comments may be submitted by May 31, 2023.