APRA tackles new, emerging risks in 2023-2024 corporate plan

The Australian Prudential Regulation Authority (APRA) has released its new corporate plan for the banking, insurance, and superannuation industries.

The 2023-24 Corporate Plan, which will be implemented in the next four years, focuses on new and developing risks affecting the global financial system.

APRA’s new approach tackles geopolitical instability, high inflation, rising interest rates, the increasing threat of cyberattacks and scams, and the frequency of natural disasters.

Priority areas include:

• Addressing system-wide risks

• APRA seeks to improve cross-industry stress-testing and ensure macroprudential policy settings “remain appropriate” for the operating environment

• More focus on operational resilience

• This will include cyber resilience, crisis management, and operational risk management to ensure the continuity of critical financial services

• Climate-related financial risks

• APRA pushes for a climate vulnerability assessment for general insurers and will embed climate risk in its approach to supervision

• Boosting superannuation transparency

• This is aimed at providing APRA members with better insights into investment performance and focus on retirement outcomes

The corporate plan is in response to lessons learned from the collapse of Silicon Valley Bank and Credit Suisse’s takeover in March. It is also based on the Financial Regulator Assessment Authority.

APRA said it will also progress plans to modernise the prudential architecture, sharpen industry supervision and increase transparency by transforming technology and data use, and will continue to build an “agile, engaged workforce” that can tackle new and emerging issues.

In a statement, APRA chair John Londsdale (pictured) said the organisation’s work is still based on the twin themes of “protected today” and “prepared for tomorrow.” But he noted that the actions APRA takes and areas it focuses on “cannot remain static.”

“As new risks emerge or accelerate, increasingly driven by technological innovation, our agenda continues to evolve in response to the changing operating environment,” Londsdale said.

He added financial stability threats can quickly emerge in new ways, as demonstrated in previous global health and economic challenges.

“By closely monitoring the external environment and adjusting our supervision approach accordingly, APRA aims to ensure Australia’s financial institutions are prepared to withstand severe shocks and remain a source of strength for the community,” Londsdale said.

Download the full corporate plan here.