🇨🇦 Latest Financial Risk Outlook

In April, the Canadian financial regulator OSFI released its annual outlook of financial system risks.

1️⃣ Housing market downturn risk

(⬆️ from #2 last year)

The sharp increase in interest rates caused a significant drop in housing prices and led to higher mortgage costs.

In response, lenders are asked to properly recognize the risks and work with borrowers to find solutions.

2️⃣ Liquidity and funding risk

(⬆️ new this year)

The regional bank crisis in the US serves as an example of the heightened risk in this category. A large amount of funds can be withdrawn rapidly, leading to the collapse of a financial institution.

3️⃣ Commerical real estate risk

(⬆️ from #6 last year)

Hybrid work arrangements, reduced staffing, and softening consumer demand have put downward pressure on both office and retail assets.

Other risks on the list:

4️⃣ Transmission risk from non-bank financial intermediaries sector

(⬆️ new this year)

5️⃣ Corporate and commercial credit risk

(⬆️ from #7 last year)

6️⃣ Digital innovation risk

(⬇️ from #3 last year)

7️⃣ Climate risk

(⬇️ from #4 last year)

8️⃣ Cyber risk

(⬇️ from #1 last year)

9️⃣ Third-party risk

(⬇️ from #5 last year)

OSFI’s Annual Risk Outlook – Fiscal Year 2023-2024