OSFI.SupFrm Flashcards

1
Q

Briefly explain the main responsibility of OSFI relationship manager

A

Main point of contact between FRFI and OSFI
→ responsible for maintaining an up-to-date risk assessment of the FRFI

FRFI = Federally Regulated Financial Institution
OSFI = Office of the Superintendent of Financial Institutions

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2
Q

Briefly describe 4 key principles OSFI uses in its risk assessment of insurance companies.

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

Briefly describe 3 primary concepts of OSFI's risk assessment of insurance companies.

A
  • Significant activities
  • Inherent risk
  • Quality of risk management
  • NR (net risk)
  • importance & ONR (Overall Net Risk)
  • Earnings
  • Capital
  • Liquidity
  • risk matrix & CRR (Composite Risk Rating)
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4
Q

Briefly explain the 4 steps that OSFI follows in risk assessment process.

A

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

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5
Q

Briefly describe what is meant by significant activities

A

Anything that is fundamental to to the business model (LOB, unit, process,…)

It’s the fundamental risk assessment concept within the supervisory framework

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6
Q

2 levels of control at which OSFI assesses the quality of risk management

A

Operation management – basically the management of day to day operation to insure
risk are managed
Oversight functions – should look at the risk at an enterprise wide level and assess risk
that are at that level

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7
Q

Identify the 3 core supervisory processes in risk assessment.

A
  1. Planning
  2. Execution (& updating risk profile)
  3. Reporting & intervention
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