On November 9, 2023 OSFI hosted a webinar to present its new Supervisory Framework for financially regulated financial institutions (FRFI). The framework will be published on OSFI's website in February 2024 and will come into effect in April 2024. A copy of the presentation deck is available here. 

In summary, the framework will include: 

• Rating Scale: An expanded eight-point rating scale that will map existing Intervention Ratings and provide more significant differentiation for stage 0 entities (normal activities). 
• Overall Risk Rating (ORR): The introduction of ORR replaces CRR and denotes a financial institution's risk of failure (level of overall risk to the financial viability). The expanded eight-point scale provides more information about risk positions in four risk categories (business risk, financial resilience, operational resilience, and risk governance), assessing the overall risk level to the financial viability. 
• Tier Rating: A five-point tier rating reflects size and complexity, considering potential contagion in the event of failure. 
• Climate-focus: Climate will take on an element of OSFI Supervisory expectations. While B-15 still needs to be implemented, OSFI said that institutions want to hear about physical and transition risks from the regulator.  

OSFI's new framework aims to be more strategic and responsive to risks than the current framework. For example, OSFI indicated that it no longer intends to provide risk ratings for each business line. Still, each business line's activities will affect the institution's broader risk rating.

In addition, the supervisory comments will no longer include "suggested" changes", as all changes are considered requirements or part of a newly introduced "urgent" nature. Should the FRFI not make changes in a timeline befitting the urgency of the risk, then OSFI will increase the institution's risk rating. Therefore rating changes may shift within a matter of hours. While institutions aren't expected to see an immediate change due to this framework, financial institutions are expected to oscillate between OSFI's risk ratings more frequently depending on the risk and how the institution responds.