OSFI Introduction
Current risk environment
Global markets continue to experience episodes of volatility as investors shift between exuberance and sharp
selloffs often triggered by geopolitical events. The Canadian economy continues to contend with the negative
impacts of the current geopolitical and trade environments. To date, subdued growth and a softer labour market,
particularly in regions most impacted by the changing trade dynamics, have characterized our risk environment.
While considerable progress is underway to address these challenges, near-term economic threats remain.
Geopolitics can act as a driver of risk and can trigger scenarios that have negative outcomes. In this uncertain
environment, we are focused on core risks that can be influenced by geopolitics but have a direct impact on the
Canadian financial sector, many of which are perennial.
This year, our ARO highlights the following key risks:
real estate secured lending (RESL) risk
non-bank financial institution (NBFI) risk
liquidity and funding risk
Risks that can materially impact Canadian institutions do not change dramatically year to year, however, the
probability that various risks materialize does shift as the risk environment changes. We maintain heightened
activity around both high-impact risks and high-probability risks.
Bankwatch 