Section 4: Environmental Scan and Risks

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Environmental Scan

The AGCO has experienced significant growth in the past decade, having assumed regulatory responsibility for a new competitive internet gaming market, recreational cannabis retail, and the horse racing industry, in addition to ongoing alcohol retail modernization.

Since the launch of Ontario’s private recreational cannabis retail model in 2019, the AGCO has seen the growth of a robust open market for retail sales and understands the competitive pressures that operators and prospective operators are under. It will continue to work with partners such as the Ontario Cannabis Store on opportunities to support cannabis retailers while combatting the illegal market and to keep youth and communities safe.

The government is working on its plan to continue expanding alcohol sales to more retail locations. The AGCO will continue to collaborate with government as more details become available and will continue to explore innovative approaches to regulating the liquor sector, all while maintaining a strong focus on social responsibility measures that protect the public interest.​

Capitalizing on these dynamic and growing industries and based on recommendations from the Office of the Auditor General, the AGCO will increase its focus on strengthening its financial framework over the next three years as well as finding opportunities for business optimization measures and digital tools.

External Factors

The AGCO has identified enterprise-wide risks that could impact its ability to deliver on its regulatory responsibilities. The AGCO will continue to monitor these risks and implement risk mitigation strategies to ensure itis able to fulfill its mandate.

Legislative Changes and Government Priorities

Many of the determinants of the AGCO’s operating environment flow from changes to government legislation and regulations. These new opportunities underline the importance of focusing regulatory attention on higher-risk areas so that the AGCO is better equipped to navigate a changing environment.

Currently, the AGCO is actively engaged in the federal review of the Cannabis Act, through a written submission and participation in roundtables with the Expert Panel.​ The AGCO will continue to work with its government partners to manage any impacts to provincial regulators that may occur as an outcome of the review.

Emerging Issues and Industry Trends

The AGCO continues to monitor and address the evolution in public and consumer attitudes towards the sectors it regulates and will continue to stay informed on issues related to unregulated areas and illegal markets. These industry trends include changing consumer choices, increasing customer service expectations, and calls for more stringent protections on digital information. These trends are linked to global currents of rapidly advancing technological development, fully integrated use of data and analytics, and an increasingly digital first world. As a modern and collaborative organization, the AGCO will work with government partners, municipalities, law enforcement, and its stakeholders to address new challenges that may emerge.

Anti-Money Laundering

Anti–money laundering (AML) continues to be a key focus. The AGCO continues to proactively monitor, detect and deter money laundering from occurring within or related to legalized gaming activities in Ontario.

Cyber Security

Cyber attacks are a significant threat to all government entities. The AGCO continues its cybersecurity roadmap and has implemented significant controls to monitor unauthorized network and system access to complement phishing and social engineering attack controls.

Internal Factors

Competitiveness Sustainability & Expenditure Management  

Looking forward to 2024 and the following years, the AGCO aims to balance the need for economic sustainability and recovery with continuing its focus on regulating in the public interest. The AGCO has initiated a funding framework review with the Ministry of the Attorney General to mitigate its ongoing structural deficit and respond to the government’s commitment to program sustainability and in response to the Auditor General’s recommendations for the AGCO to become more financially self-sufficient.

The ongoing Auditor General follow-up report is expected in 2023-24. The AGCO, with the support of government, will work to implement any needed changes to the existing AGCO funding framework and any potential legislative changes that may occur as an outcome of the review.  

Assessing and Managing Risk

The AGCO uses an Enterprise Risk Management (ERM) Framework to monitor, identify, and mitigate these environmental risk factors. The ERM Framework assists the organization in identifying areas of risk and responding is a disciplined and integrated way.  

Key opportunities to address risks identified under this framework include:  

  •    Building a strong information security approach, including expeditious recovery in the event that a significant information security incident occurs.
  •    Ensuring the People First strategy addresses current workforce trends and best practices to enhance talent attraction and retention.  
  •    Developing the funding framework to meet operating and performance expectations.
  •    Strengthening our effectiveness as a regulator by addressing concerns and/or changes in the regulated sectors or service expectations in a timely manner.

ERM is a continuous, proactive, and systematic process to understand, manage, and communicate risk from an organization-wide perspective and assists management in making strategic decisions that contribute to the achievement of the AGCO’s corporate objectives. As part of the annual risk management cycle to identify key risks and exposures, a risk workshop is held with the senior management team to identify, assess, and decide on prioritization and mitigation activities for the AGCO’s top risks. Additionally, a quarterly divisional-specific risk management process occurs to support the AGCO to better manage its risks throughout the year. Staff and management are involved in these risk assessments that help the AGCO identify and action its key risks.  

The results of the risk assessment activities are a key input in developing the AGCO’s Internal Audit Work Plan, which prioritizes areas considered high risk. The AGCO’s identification of key risks also assists in the development annual priorities.