Commercial real estate risk management - OSFI

Co-authored by: Vishal Gossain, EY Risk Analytics and Balance Sheet Management Leader | EY Canada

Haithem Kaabi, Senior Manager, Wholesale Credit Risk Lead | EY Canada

Wankun Li, Senior Manager, Wholesale Credit Risk Specialist | EY Canada

Lina Wang, Manager, Financial Services Risk Management | EY Canada

Yi Zhu, Manager, Financial Services Risk Management | EY Canada

Arthur Gerbé, Senior Consultant, Financial Services Risk Management | EY Canada

In the face of a heightened risk environment that increases the probability of global commercial real estate credit losses, the Office of the Superintendent of Financial Institutions (OSFI) has put forth interim guidance. This new guidance emphasizes specific focus areas in the commercial real estate sector and outlines fresh expectations on its risk management. All federally regulated financial institutions should anticipate more detailed directives and in-depth reviews from OSFI in response to these changing circumstances.

Acknowledging the seriousness and the urgency of this outlook, we undertook a comprehensive inquiry into the potential repercussions of these new expectations on small and medium-sized banks and domestic systemically important banks. This publication scrutinizes crucial risk management aspects such as governance, data handling, risk assessments and account management. These fundamental areas of the banking operation landscape form the cornerstone of maintaining the stability and resilience of these financial entities, especially in an increasingly stringent regulatory environment.

The publication further demonstrates EY’s deep knowledge, experience, approaches and readiness to support these entities in navigating this time of change.

Explore part 1 of our two-part series on commercial real estate risk management.