OSFI releases fall update to the Annual Risk Outlook for 2024-2025

Today, OSFI released its fall update to the 2024-2025 Annual Risk Outlook (ARO). This semi-annual update provides an overview of risks OSFI has identified as the most pressing facing Canada's financial system. The update also informs Canadians how these risks will be addressed.

In May, OSFI identified real estate secured lending and mortgage risks; wholesale credit risks; funding and liquidity risks; and integrity and security amidst geopolitical uncertainty as the top four risks facing Canada’s financial system.

While these four risks remain, today’s update identifies two integrity and security risks that have intensified: risks to operational resilience and risks related to artificial intelligence (AI).

To address these risks, OSFI will undertake the following actions:

• assess institutions' preparedness to manage third-party risks and technology and cyber-related risks
• assess the strength of institutions' business continuity plans, disaster recovery plans, and internal third-party contingency plans
• collect third-party data to increase understanding of systemic concentration risk
• conduct thematic reviews and monitor cyber resilience and third-party risk management of critical outsourced functions
• assess the impact of AI adoption on the risk landscape and strengthen existing guidelines to decrease AI-related risks
• issue an updated Model Risk Management guideline in summer 2025

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OSFI will adapt and respond to intensifying integrity and security risks within the Canadian financial system in a manner consistent with the 2023 change in OSFI’s mandate. With the semi-annual update to our 2024-25 Annual Risk Outlook, OSFI announces our supervisory and regulatory responses to intensifying risks related to operational resilience and artificial intelligence.

Peter Routledge, Superintendent of Financial Institutions