OSC to launch risk assessment questionnaire for advisors, fund managers

In a follow-up to a review conducted in 2002, the Ontario Securities Commission will request information from advisors and fund managers on their structure and their business operations to evaluate the potential impact on investors from a risk perspective. The OSC will also seek details on any risk mitigation structures and policies in place.

The online questionnaire will request information that will enhance the risk assessment model used by OSC staff to focus compliance field reviews in the most effective and efficient manner.

A similar questionnaire was circulated in 2002, and contributed to the ongoing development of the compliance risk assessment model. “Now that we have used the risk assessment model for over a year, we are able to better understand where it could be improved, and how we can streamline our information-gathering process,” said Marrianne Bridge, manager of compliance at the OSC, in a news release.

The overall questionnaire is designed to gather information about advisers’ and fund managers’ business operations from a risk perspective, and to identify risk-mitigation strategies in place by examining, among other areas, the following:

• Business Activity;
• Strategic and Tactical Management;
• Adequacy of Operational Procedures;
• and Risk Controls.
  
  According to the OSC, the risk criteria are designed to identify and target the most likely instances of non-compliance with securities laws.
  
  Once a thorough review of the questionnaires has been made, advisors and fund managers will be risk ranked according to four defined categories: high, medium-high, medium-low, and low. This assessment, which will be disclosed only to the advisor or fund manager at the completion of a compliance field review, will determine the frequency and extent of compliance field reviews. The higher the risk ranking, the more frequent the review of the market participant.
  Advisors and fund managers will receive instructions on the information request and will be asked to complete the online risk assessment questionnaire by May 28.