OSFI Supervisory Framework Flashcards

1
Q

Main responsibility of OSFI relationship manager.

A

They are the main point of contact between FRFI and OSFI. They are responsible for maintaining an up-to-date risk assessment of the FRFI.

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2
Q

Key principles for risk assessment. (7)

A
  • identify material risks
  • should be forward-looking and allow for early intervention
  • use sound predictive judgement
  • understand risk drivers
  • differentiate between inherent risks and management of those risks
  • dynamic adjustment
  • assess whole institution by calculating a CRR (Composite Risk Rating)
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3
Q

Primary concepts of risk assessment. (9)

A
  • significant activities
  • inherent risk
  • quality of risk management
  • NR (Net Risk)
  • importance and ONR (Overall Net Risk)
  • earnings
  • capital
  • liquidity
  • risk matrix and CRR (Composite Risk Rating)
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4
Q

Describe significant activities.

A
  • anything that is fundamental to the business model (LOB, unit, process, …)
  • it’s the fundamental risk assessment concept within the supervisory framework
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5
Q

Describe quality of risk management.

A

CONTROL LEVEL 1: operational (day-to-day control of significant activities)
CONTROL LEVEL 2: oversight (of finance, compliance, actuarial, …)

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6
Q

Describe NR (Net Risk).

A
  • Net Risk of significant activity = judgement on inherent risk and quality of risk management
  • can be LOW, MODERATE, ABOVE AVERAGE, HIGH + trend
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7
Q

Describe risk matrix, CRR.

A

RISK MATRIX: records assessment of significant activities and risks.
CRR: culmination of assessment. Can be LOW, MODERATE, ABOVE AVERAGE, HIGH

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8
Q

Core supervisory processes of risk assessment. (3)

A
  • Planning
  • Execution and updating risk profile
  • Reporting and intervention
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9
Q

Fundamental concept of OSFI’s supervision of risk assessment.

A

Significant activities

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10
Q

OSFI’s steps (4).

A

STEP 1: identify significant activities
STEP 2: assess inherent risks and quality of risk management
STEP 3: calculate NR for each significant activity using Appendix C
STEP 4: use risk matrix to assess intervention status and CRR - Appendices D and E

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