OSFI.CorpGov Flashcards
FRFI stands for..?
Federally Regulated Financial Institution
Define ‘corporate governance
Set of relationships between: Board of Directors, management, shareholders and other stakeholders
Identify 2 characteristics of good corporate governance
- Incentivizes good behaviour
2. Enables monitoring of operations & performance
Contrast the roles of the Board of Directors and Senior Management
Board of Directors: 1. Direction-setting 2. Oversight of management Senior Management: 1. Implement Board of Directors decisions 2. Oversight of operations
Briefly explain the role of corporate governance in OSFI’s supervision (2)
OSFI relies on good Corporate Governance to support its supervisory role
OSFI requires BoD involvement during interventions to determine best corrective actions
identify 2 functions of the CRO (Chief Risk Officer)
Part of Senior Management, thus:
- Implement risk management policy
- Provide regular reports
Identify and describe 2 items that should be included in the design of a Risk Appetite Framework (RAF)
- Risk Appetite Statement:
Reflects the level of risk and type of risk FRFI is willing to accept to meet
business objectives - Risk Limits
Refers to allocations of FRFI’s RAS to:- Risk categories (IMCO)
- Business unit
- LOB or product
- Roles & Responsibilities of those implementing the RAF
Identify the 4 key features of the risk appetite statement
- Relate to short & long term strategies
- Includes qualitative / quantitative measures of risk
- Forward-looking
- Consider normal and stressed scenarios
Briefly explain the qualitative and quantitative measures within the risk appetite statement
QUALITATIVE:
Identify significants risks company wants to take/avoid + why
QUANTITATIVE:
Measures of ECL (earnings, capital, loss) FRFI is willing to accept
How is compliance with risk appetite framework ensured? (3)
CRO:
1. Ensures risk limits are CONSISTENT with risk appetite statement
2. Provides reports to BoD & SnrMgmt ASSESSING risk limits and risk
appetite statement
INTERNAL AUDITOR:
3. Ensures COMPLIANCE with risk appetite framework