Finnish authority FIN-FSA reveals supervisory priorities for 2024

Operational and financial risks, ESG and cyber risks, and solidity of supervised entities’ governance are listed.

Finanssivalvonta, the Financial Supervisory Authority in Finland (FIN-FSA), has announced its supervisory priorities for 2024, and will focus on operational and financial risks in the uncertain operating environment, long-term trends and risks, and the soundness of supervised entities’ governance.

Due to changes in the operating environment relating to economic uncertainties, cyber security risks and increasing regulation, FIN-FSA is therefore set to focus on these areas, and stresses the importance of solvency, liquidity and good governance.

“Our objective is to be a proactive and predictable supervisor, in line with our strategy. We will enhance predictability by, for example, communicating our supervisory plans so that our supervised entities know what we consider to be important at any given time. We also aim to be flexible and ready to review supervisory priorities, if necessary, throughout the year,” said Tero Kurenmaa, Director General of the FIN-FSA.

Governance, sanctions and cyber risks

Regarding sound governance, FIN-FSA said it would focus on governance and control systems, the risks and management of outsourcing, and data quality. For operational risks, some of the focus areas will include compliance and monitoring of sanctions, as well as contingency plans and continuity management.

The supervision of financial risks will involve the capital market’s sensitivity to shocks, valuation of illiquid assets, growing credit risks and challenges within liquidity management.

For long-term trends in the operating environment, FIN-FSA will look at ESG risks, rising information and communication technology and cyber risks, digitalization, and tighter and changing regulation.

Overall, FIN-FSA’s supervisory assessments and inspections will this year prioritise:

  • governance and control systems;
  • increase in credit risks;
  • increase in ICT and cyber risks;
  • code of conduct;
  • quality of data;
  • sanctions;
  • preparedness and continuity management;
  • tighter and changing regulation; and
  • liquidity management.

Crypto risks new focus area

Due to risks of anti money laundering and counter-terrorist financing, a new supervisory focus is set on customer due diligence procedures on crypto-asset companies this year. “The total risk exposure of these entities is considered to be significant,” FIN-FSA said.

The authority will also conduct a thematic assessment of the real estate investments of insurance institutions, with specific attention to illiquid investments and their valuation and risks.

For pension providers, focus will be on risk management, conflicts of interests and marketing of cost shares. FIN-FSA will also continue its work to conduct inspections on life insurance companies.

Other areas of coverage will include unemployment funds, the activities of car dealers and vehicle inspection offices and part-time insurance agents, and to supervise listed companies.

Together with ESMA (the European Securities Markets Authority) and other national supervisory authorities, FIN-FSA will also assess code-of-conduct obligations regarding sustainability data for investment firms, including the risk management methods of their trading systems.