OSFI releases review of supervisory framework for financial institutions and pension plans
December 16, 2025
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The Office of the Superintendent of Financial Institutions (“OSFI”) released its review of the renewed Supervisory Framework one year after its implementation for federally regulated financial institutions and pension plans. The framework was launched in April 2024.
The review confirmed that the framework improved supervisory effectiveness and communication. Notable benefits include:
- Better risk conversations: The introduction of the Overall Risk Rating (“ORR”) and clearer supervisory letters enabled more meaningful discussions about risk.
- Earlier intervention: OSFI can now respond more quickly to emerging risks, supporting proactive supervisory action.
The review also highlighted two areas for improvement:
- “Weakest link” principle: Currently, the ORR cannot exceed the lowest rating among four categories —business risk, financial resilience, operational resilience, and risk governance. For financial institutions specifically, this approach may overstate overall risk when non-financial factors dominate.
- Clarity and transparency: There is a need for clearer methodologies for risk assessment and greater transparency in incorporating integrity and security risks.
OFSI is developing an action plan to implement refinements to the assessment framework through 2026-27 by adding flexibility to the “weakest link” principle, refining and expanding rating indicators, clarifying risk tolerance, and more explicitly implementing integrity and security risks.
OSFI will keep stakeholders informed as it implements these refinements.
Click on ‘More Information’ below to read the report:
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