APRA decided to apply an additional $250 million capital requirement to Allianz Australia Limited to reflect the issues identified in the risk governance self-assessment by the insurer. With this, Allianz Australia Limited becomes the fifth APRA-regulated entity to have an additional capital requirement imposed due to heightened operational risk, after Commonwealth Bank of Australia, ANZ, National Australia Bank, and Westpac. APRA has advised Allianz Australia Limited that the extra capital requirement will remain in place until it completes the remediation work underway to strengthen risk management and closes gaps identified in its self-assessment.
Allianz Australia Limited was one of the 36 banks, insurers and superannuation licensees that APRA had asked to undertake a self-assessment last year. The self-assessments were intended to gauge whether governance weaknesses identified by the Prudential Inquiry of APRA into the Commonwealth Bank of Australia also existed in other institutions. Overall, the self-assessments confirmed that many of the issues identified in the inquiry were not unique to Commonwealth Bank of Australia, including the need to strengthen non-financial risk management; ensure accountabilities are clear, cascaded, and enforced; and enhance risk culture. A number of common themes have emerged from the self-assessments:
- Non-financial risk management requires improvement
- Accountabilities are not always clear, cascaded, and effectively enforced
- Acknowledged weaknesses are well-known and some have been long-standing
- Risk culture is not well-understood and, therefore, may not be reinforcing the desired behaviors
Keywords: Asia Pacific, Australia, Insurance, Capital Requirements, Operational Risk, Allianz Australia Limited, Self Assessment, Governance, Prudential Inquiry, APRA
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