The Australian Prudential Regulation Authority (APRA) has published its Corporate Plan for 2022-2023. The plan sets out the strategic priorities of APRA, which include preserving the financial and operational resilience of banks, building on momentum to modernize the prudential architecture to ensure it remains fit for purpose—both now and in the future, and better enabling data-driven decision-making by stakeholders of APRA.
The corporate plan outlines the following key strategic priorities:
- Preserve resilience of banks. APRA took steps to strengthen resilience of the banking system, including finalizing a new capital framework designed to preserve and formalize unquestionably strong levels of capital; this framework will come into effect in January 2023. APRA will continue its heightened focus on operational and technological resilience across Australia’s financial system by delivering on its cyber security strategy involving embedding prudential standard on information security by independently assessing compliance (CPS 234) and increasing data-driven supervision scrutiny and intensity by sharing aggregated data insights with industry for benchmarking and self-assessment. APRA plans to update the prudential standards on risk management (CPS 220), governance (CPS 510), and fit and proper (CPS 520) and related guidance, to ensure they are, among other things, reflective of the current practices and aligned with the proposed new Financial Accountability Regime.
- Modernize prudential architecture. Over the year ahead, APRA proposes to develop a handbook for board directors to support them in better understanding their obligations and establish an advisory panel to provide external perspective on initiatives as they are shaped and progress, particularly with regard to digitalization. APRA will also streamline existing standards and guidance wherever possible; explore how to digitalize its standards, guidance, information papers, industry letters, and frequently asked questions (FAQs); progress policy development on emerging issues such as crypto-assets and changes in group structures; and map out a longer-term strategy for responding to emerging risks.
- Enable data-driven decision-making. In the short-term, APRA will finalize its roadmap for new data collections, continue migrating all collections to APRA Connect, and develop a targeted data strategy for the insurance sector. Then, by the end of 2027, APRA aims to complete the migration of data collections to APRA Connect. APRA will continue to invest in uplifting its data analytics and will use richer and deeper data and insights to enhance supervisory outcomes, in addition to sharing data with stakeholders and the public.
During the 2022–2026 plan horizon, APRA will seek to ensure the Australian financial system is prepared for tomorrow by:
- increasing its focus on the evolving financial landscape in Australia, including responding to the impact of new financial activities and participants.
- helping to find solutions to important challenges including the financial risks associated with climate change. APRA will continue to conduct the climate vulnerability assessment and self-assessment survey; identify and share insights on climate risk management practices; continue to
work closely with CFR agencies, industry bodies, research organizations, and global regulatory peers; and embed climate risk considerations into the supervisory activities. APRA also continued its work with the five largest banks on the Climate Vulnerability Assessment and expects to publish the results of this assessment in the coming months.
- adopting the latest regulatory tools, techniques, and practices.
Keywords: Asia Pacific, Australia, Banking, Corporate Plan, Strategic Priorities, Credit Risk, Basel, Cyber Risk, Operational Risk, Governance, Climate Change Risk, ESG, Data Collection, APRA Connect, Regtech, Suptech, APRA
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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