61. Supervisors should keep in mind the following four principles in deciding the tools to adopt for supervision. The first three principles should guide supervisors in the selection of tools to use based on their risk assessment of the regulated entity, as well as how the various tools interact with each other. The fourth principle is important given the fast-changing risk environment and need for supervisors to identify key risk areas and to adapt their supervisory approach/plan to target those risks.

1. Outcome-focused: Supervisors should be clear about the intended objective of supervision for the sector and for individual entities. These objectives help inform the supervisor's approach in selection of tools to adopt.

2. Risk appropriateness: The type and intensity of tools applied to an entity should be aligned with the supervisor's understanding of the nature and level of risks of the entity as well as the supervisory strategy in place.

3. Efficiency: In selecting the most suitable tool, supervisors should consider the type of resources that are available. Supervisors should ensure that the tool chosen is the most efficient means of achieving the supervisor's objective [For example, shorter, more targeted inspections/meetings could be appropriate. In addition, resources should be used as efficiently as possible, for example: the reduction in administrative elements (where possible); using smaller teams to carry out inspections to gain greater coverage; outsourcing certain activities etc.].