Each year we look to our members to help us narrow down themes to centre and prioritize our activities for the upcoming year. This is always a challenging exercise due to the breadth of regulatory topics across Canadian regulatory bodies and our diverse member base. We find ourselves at this time of year again and are reaching out to our members for assistance. Here are some thoughts from the CRTA Board to get us started.
Consider these themes and Vote!
Build Resiliency Through Data – This theme may seem like ‘old news’ but new guidance in non-financial risk areas such as culture, climate and sustainability require financial institutions to aggregate and normalize unstructured data. Effective controls, risk management and AI outcomes rely on good quality data. Regulatory focus on risk management and operational resiliency will continue to evolve in 2025. Financial institutions will need to ‘know their data’ and have strong data management in place to withstand ‘shocks,’ strengthen risk programs and react quickly to change.
Culture and Conduct – OSFI released a notification on Culture Risk Management in November 2024 which supersedes the previously framed draft guidance. Its sets out expectations on accountability and governance and gets quite granular in the appendix on how culture risks should be managed. There is a lot for our members to consider when defining qualitative and quantitative measures and how to integrate effectively into enterprise risk programs.
Financial Crime Management – David Coffey from the Toronto Police shared at one of our recent events that “Canada has had approximately $C1billion in reported losses due to fraud in 2024” (keep in mind that only 5-10% of issues are reported so you need to multiple this by at least ten!). Financial Crime undermines public trust and the financial system and threatens national security. With greater collaboration across the public and private sector, we can close loopholes and enhance detection and oversight.
Preparation and Readiness for GENAI - GenAI in the financial sector has dual roles: the potential to drive catastrophic cyber risks versus its ability to unlock new lines of business and create competitive advantages. Information security and operational resiliency will become increasingly important to protect against cyber risks and enhance safe deployment of AI.
Regulatory Intensity and Divergence – Regulatory divergence and lack of harmonization in rules/guidance across jurisdictions is nothing new – Canadian banks have been dealing with overly complex and non-standard regulatory reporting requirements for many years. However, we expect legislation and policy divergence to intensify in areas such as climate and AI. Canadian banks were subject to several regulatory fines by US regulators in 2024 which raises the question of whether we are holding Canadian banks to the same regulatory standard as other jurisdictions? Are we preparing our banks to operate in global markets?
Risk Management for Disruptive Technologies - Risk and compliance management skills to address the legal, ethical, cyber, and regulatory challenges posed by emerging technologies like Generative AI (GenAI) and cloud foundational models are vital today.
Third-Party Arrangements – As AI becomes increasingly embedded into products and services, the relationship between financial institutions and their third-party providers is becoming increasingly complex. How do financial institutions effectively manage the risk while staying agile and innovative? Will the traditional procurement and contract process need a re-think?
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