Federal financial regulators are proposing guidance for ensuring that firms build sound corporate cultures and address the kinds of risks that can emerge from workplace mindsets.
The Office of the Superintendent of Financial Institutions (OSFI) published draft guidance, which sets out the regulator’s “principles-based expectations” for firms on defining, developing, and overseeing their corporate cultures.
“Culture can influence sound decision-making, prudent risk-taking and effective risk management, which can materially support or weaken the resilience of federally regulated financial institutions,” the draft guidance said.
Given that a firm’s culture can impact its safety and soundness, and may affect confidence in the overall financial system, OSFI is proposing guidance on culture and behavioural risks.
“This guideline sets principles-based expectations for [firms] to oversee their culture and assess the impact of behavioural patterns to effectively manage the associated risks,” it said.
The proposed new guidance is out for comment until May 31.
OSFI is aiming to issue its final guidance by the end of the year, along with a self-assessment tool designed to help firms comply with its expectations.