The Australian Prudential Regulation Authority (APRA) published its corporate plan for 2021-25. The plan sets out the strategic priorities of APRA to protect bank deposit-holders, insurance policyholders, and superannuation members and focuses on preparing for future challenges. With respect to the initiatives of relevance for the banking sector, over the coming months, APRA plans to focus on completing the implementation of Basel III reforms, delivering on the 2020-2024 cybersecurity strategy, furthering the governance, culture, remuneration, and accountability (GCRA) work program, encouraging innovation in regtech and suptech, and developing advanced analytical capabilities.
The corporate plan outlines the following key strategic priorities:
- Preserve the resilience of banks. APRA will focus on completing the implementation of Basel III capital reforms as well as on maintaining scrutiny of credit and liquidity risks at individual bank and systemic levels. APRA will ensure that banks are operationally resilient, support the ongoing development of credible recovery plans by banks, and monitor banking industry cohorts by adopting targeted supervisory strategies, where appropriate. APRA will deliver on the 2020-2024 cybersecurity strategy with aim of strengthening cyber resilience. APRA will also continue to deliver on the GCRA work program with concentrated attention in certain areas, including finalizing and implementing prudential standard on remuneration (CPS 511) and strengthening prudential standards on risk management (CPS 220), governance (CPS 510), and fit and proper (CPS 520).
- Modernize the prudential architecture. Over the 2021–2025 plan horizon, APRA will modernize the prudential framework to make the prudential standards and guidance more accessible for industry, reduce burden, and encourage innovation in regtech and suptech. It will build capabilities to support digitization and better regulation, as well as adapt the architecture to cater for new and emerging risks from the evolving global and domestic financial landscape.
- Enable data-driven decision-making. To achieve this strategic priority, in the short-term, APRA will deliver its new data collection infrastructure in the form of APRA Connect, and accelerate migration of continuing data collections from its legacy system (D2A) to the APRA Connect platform across all regulated industries. APRA will implement new data collections designed to collect more granular data, continue to pilot and apply applications of data science analytics techniques, and continue to work with other government agencies on opportunities to collect data once and share. APRA eventually intends to decommission D2A and further develop advanced analytical capabilities. APRA also plans to modernize its data publications by investing in tools to support more extensive external data sharing, both publicly and between government agencies.
Over the 2021–2025 plan horizon, APRA will seek to ensure the Australian financial system is future-ready by:
- Dedicating regulatory attention to the evolving financial landscape in Australia including understanding the impact of new financial activities and participants.
- Helping to find solutions to current challenges, such as superannuation retirement income products, insurance accessibility and affordability for Australians, and the financial risks associated with climate change. APRA will continue its work on improving the understanding and managing of financial risks associated with climate change, to facilitate well-informed decision-making by regulated entities. This includes finalizing prudential guidance, conducting climate vulnerability assessments, data gathering and further engagement with Council of Financial Regulator (CFR) agencies, industry bodies, research organizations, and global regulatory peers.
- Adopting the latest regulatory tools, techniques and practices in areas such as specialist regulatory services, enforcement actions, transparency, and resolution.
Keywords: Asia Pacific, Australia, Banking, Corporate Plan, Strategic Priorities, Credit Risk, Basel, Liquidity Risk, 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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