The Australian Prudential Regulation Authority (APRA) has released its 2024-25 Corporate Plan, outlining a strategy to bolster the resilience of Australia’s financial sector amid evolving global challenges. The plan, according to a news release, now integrates annual policy, supervision, and data priorities.
APRA’s updated plan highlights several key priorities for the coming years. A central focus will be strengthening bank capital and liquidity standards, cognizant of lessons from last year’s global banking disturbances. Additionally, APRA aims to enhance operational resilience through the introduction of Prudential Standard CPS 230 Operational Risk, which will set new minimum standards for managing operational risk.
Cyber risk management is another area of focus. APRA plans to raise industry standards to better protect financial institutions from increasing cyber threats. The authority is also set to develop its first system-wide stress test to assess interconnections across the financial sector, a move designed to identify and mitigate potential contagion risks.
Addressing climate risk is another priority. APRA will require entities to factor the financial impacts of climate change into their decision-making processes. The authority also plans to collaborate with stakeholders to bridge the protection gap in household insurance and work with the Australian Securities and Investments Commission to ensure superannuation trustees meet their retirement income covenant obligations.
Internally, APRA will invest in enhancing its workforce and data capabilities, using additional funds from the 2024-25 Federal Budget to improve data collection and analysis. This investment aims to ensure that APRA’s team remains skilled and capable in an increasingly complex regulatory environment.
APRA chair John Lonsdale emphasised the importance of the plan in maintaining financial and operational resilience. “Over recent years, APRA’s size and responsibilities have increased as the financial system has grown in scale and complexity,” Lonsdale said. “The interconnected nature of our digital environment means shocks travel across countries and industries much faster, and we need to ensure APRA is set up to react swiftly and effectively to key issues and crises.”
In conjunction with the Corporate Plan, APRA announced an internal reorganisation to better support its strategic goals. Effective Sept. 2, APRA will streamline its structure from three frontline supervision divisions into two: general insurance and banking, and life insurance, private health insurance, and superannuation.
The new structure also consolidates financial and non-financial risk teams into a cross-industry risk division, aimed at enhancing risk management across sectors and fostering better knowledge transfer.
APRA’s other divisions—policy and advice, technology and data, and chief of staff and enterprise services—will remain largely unchanged.
The reorganisation, according to APRA, is intended to simplify decision-making and improve APRA’s responsiveness to financial risks.
“APRA will continue to evolve as a modern and future-focused regulator that retains its best-practice standing amongst global peers and continues to deliver on its core mandate of ensuring the safety and stability of the Australian financial system,” Lonsdale said.
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