On September 11, 2025, the Office of the Superintendent of Financial Institutions (“OSFI”) released Guideline E-23, Model Risk Management (the “New Guideline”). The New Guideline sets out OSFI’s expectations concerning model risk management by federally regulated financial institutions (“FRFIs”) and comes into effect on May 1, 2027.
The New Guideline will replace the existing Guideline E-23, Enterprise-Wide Model Risk Management for Deposit-Taking Institutions (the “Existing Guideline”) from 2017 and reflects OSFI’s response to the comments it received concerning the draft Guideline E-23 released in November 2023.
The New Guideline represents a significant change in OSFI’s approach to model risk management, the impacts of which extend beyond FRFIs. These changes will affect Suppliers who are providing models within the scope of the New Guideline (referred to as “captured models”) or providing services incorporating captured models, to these organizations.
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