OSFI Updates And Expands Scope Of Guideline E-23 For AI Governance

Last month, the Office of the Superintendent of Financial Institutions (OSFI) released an updated version of Guideline E-23 (the Guideline) setting out its expectations on enterprise-wide model risk management (MRM). Effective May 1, 2027, OSFI's updates respond to the growing use of AI by adding new requirements and expanding the scope of the Guideline's application, with significant implications for both regulated entities and their service providers.

What you need to know

• Expanded scope: the Guideline applies to all federally regulated financial institutions (FRFIs) and all models regardless of their source (i.e., internal or third party) or purpose.
• Required framework: FRFIs are expected to establish an enterprise-wide, risk-based MRM governance framework with policies and procedures that govern each stage of a model's lifecycle.