Section 4: Environmental Scan and Enterprise Risks
Environmental Scan
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 it is able to fulfill its mandate.
External Factors
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.
Liquor Retail Expansion
The AGCO is committed to supporting the newly expanded liquor retail marketplace by fostering a responsible, accessible, and compliant industry. The AGCO will continue to leverage a streamlined licensing process to reduce entry barriers for new participants. To help licensees understand and meet regulatory obligations, AGCO will continue to provide ongoing education and develop robust industry supports, ensuring licensees and their employees are equipped to sell, serve, and deliver liquor safely and responsibly. Additionally, the AGCO will continue to operationalize its targeted retail compliance strategy, prioritizing the protection of minors, reinforcing broader government objectives that support a thriving, and socially responsible retail environment.
Illicit Cannabis Market
Currently, the AGCO is exploring opportunities and novel approaches to address the illegal cannabis market with important emphasis on collaboration with provincial partners, including the Ontario Cannabis Store and the Ontario Provincial Police, and other stakeholder groups. Above all the AGCO remains committed to supporting licensed cannabis retailers in maintaining a robust open market that ensures the safe and legal sale of cannabis at authorized stores – a key component of combatting the illegal cannabis market.
Federal Review of Cannabis Legislation
Following the release of the final report of the Legislative Review of the federal Cannabis Act, the AGCO continues to work with its provincial partners to understand how this review may inform the provincial cannabis framework moving forward. In 2024, changes were made to the Cannabis Licence Act, 2018 and the Cannabis Control Act, 2017 to support the Government of Ontario in implementing agreements with First Nation communities with respect to cannabis regulation on reserve. The AGCO has and will continue to support the Government of Ontario in its engagement with First Nations and in implementing any such agreements into which the government enters.
Responsible Use of Artificial Intelligence (AI)
The AGCO is working to align and build the practices or mechanisms required to ensure responsible use of AI. This includes maintaining an inventory of AI use cases, publishing an updated Acceptable Use Policy with new guidelines for the use of Generative AI technology, and developing required AI Risk Management governance. The agency is currently seeking to build dedicated capabilities within its I&IT department to support transparent, responsible, and accountable ongoing AI usage to align with the government’s priorities and directive.
Public Perception and Consumer Behaviour
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. This includes 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. The AGCO will continue to engage with our licensees to understand the evolving needs of their businesses and deepen our collaboration with government partners, municipalities, law enforcement, and other stakeholders to address new opportunities and challenges that may emerge.
Anti-Money Laundering
Anti–money laundering (AML) continues to be a key focus primarily in Ontario’s land-based and online gaming sectors. 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 and AGCO regulated entities. The AGCO continues to mature its Cybersecurity Program, which includes implementing controls to monitor unauthorized network and system access, protect against phishing and social engineering, provide advanced email security using AI and machine learning, and educate users through training and simulated phishing emails. Additionally, the AGCO will implement a disaster recovery service to ensure the protection and recovery of essential business data in the event of significant disruptions to IT operations, such as a loss of equipment or a successful ransomware attack.
Internal Factors
Competitiveness, Sustainability & Expenditure Management
Looking forward to 2025 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’s expenses are offset by a combination of cost recoveries and base funding from government. As the AGCO continues to deliver on its expanded mandate, the AGCO will continue to explore opportunities for long-term financial sustainability by identifying potential offset strategies, including cost and resource optimization. As the AGCO matures its measurement practices for resource use across the enterprise, it will be able to leverage new and deeper data sets to identify opportunities for strategic and sustainable resource allocation.
Office Realty Optimization
The AGCO continues to find and create efficiencies within our current footprint to desk-share wherever possible. New employees have been integrated into our existing office space plan to eliminate any added pressure on the province’s real estate portfolio. We are committed to finding new opportunities to reduce our footprint.
Assessing and Managing Risk
The AGCO uses an Enterprise Risk Management (ERM) Framework to identify, monitor and mitigate environmental risk factors. The ERM Framework assists the organization in identifying areas of risk and prioritizing responses in a disciplined and integrated way, including in the development of annual priorities.
Key opportunities to address risks identified under this framework include:
- Confirming the effectiveness of IT security governance and risk management processes designed to counter and mitigate cyber security risks.
- Building a strong approach for expeditious recovery in the event of a significant unplanned incident.
- Continuing to attract, retain and develop our people to enhance talent attraction and retention.
- Developing the funding framework to meet operating and performance expectations.
- Informing Internal Audit’s work plan to assist with efficient allocation of audit resources by identifying projects, which address the AGCO’s evolving risks.
ERM is a systematic process to managing risk from an organization-wide perspective, which assists AGCO management in making risk-informed strategic decisions that contribute to achieving corporate objectives.
As part of the annual risk management cycle, a workshop is held with the senior management team to identify, assess, and prioritize mitigation activities for the AGCO’s top risks. Additionally, a quarterly risk management process with divisional-specific risk leads occurs to support continuous assessment and management of risks throughout the year.