Featured Product

    APRA Outlines Strategy for Data Collection and Climate Risk Assessment

    March 09, 2021

    As part of the first edition of APRA Insight for 2021, APRA published articles on its response to climate-related financial risks and its evolving data capability. The articles discuss APRA work in these areas and inform about the upcoming publications and guidance to help institutions to manage risk data and address climate risks. In a separate development, APRA agreed to accept a court enforceable undertaking from Allianz Australia, acknowledging Allianz's commitment to finish rectifying the earlier identified issues with respect to the risk and compliance weaknesses. Nevertheless, Allianz remains subject to the additional $150 million capital requirement.

    Data strategy initiatives. An article published in APRA Insight explains how APRA has begun transforming data collection from over 2,000 entities it regulates. At the heart of this evolving data capability is the APRA Connect project, which is scheduled to go live at the end of September 2021 and is expected to dramatically increase the volume of data APRA can collect. APRA Connect, which will replace D2A as the data collection tool, is a part of the data strategy that involves a shift to collecting source data, to minimize the burden on entities. APRA intends to design data collections to reflect the datasets that entities require to conduct their day-to-day business. This initiative will allow APRA to conduct more of its analysis in-house, rather than having to make a new data request each time particular information is required. To achieve its goals, APRA intends to take a different approach to its industry consultation process, which is planned to minimize friction points and design collections that mirror industry practice so the volume of data collected can be increased as efficiently as possible. Implementing this change of approach and increase in capability will require investment from both APRA and its regulated entities. APRA will implement the strategy incrementally, with new and revised data collections being undertaken using this new approach, utilizing the capabilities of APRA Connect. The full roll-out will result in a framework that delivers the needed data while minimizing required effort and compliance costs for entities. To help with the data quality and accuracy issues stemming from this substantial increase in data volumes, APRA states that it has in place a Prudential Practice Guide CPG 235 on managing data risk and continues to engage with industry to find workable solutions as issues arise. 

    Climate risk initiatives. As mentioned in APRA Insight, in an effort to address climate risks in the financial sector, APRA plans to move ahead with a new climate risk prudential practice guide and the commencement of a pilot program on climate vulnerability assessments in 2021. In an APRA survey, a third of the respondents considered climate change to be a material financial risk to their businesses now and a further half thought it would be in future. The survey findings also indicate that a majority of banks considered climate-related financial risks as part of their risk management frameworks while reputational damage, flooding, regulatory changes, and cyclones were nominated as the top climate-related financial risks. APRA also received feedback from many regulated entities, especially smaller ones, on the need for better guidance on how to respond to climate-related financial risks, especially as APRA has started urging entities to move from awareness to action in mitigating these risks. The planned prudential practice guide or PPG, which is expected to be released for consultation in the first half of this year and finalized before the end of 2021, is part of the APRA response to the received feedback. APRA also announced that the Climate Vulnerability Assessments will commencing with the five largest banks and will eventually be rolled out across the rest of the banking and the insurance and superannuation sectors, though the final timetable for this exercise is yet to be confirmed. 

     

    Related Links

    Keywords: Asia Pacific, Australia, Banking, Insurance, Reporting, Climate Change Risk, Climate Vulnerability Assessments, ESG, APRA Connect, Allianz Australia Limited, Stress Testing, Data Strategy, APRA

    Featured Experts
    Related Articles
    News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News
    News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News
    News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News
    News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News
    News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News
    News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News
    News

    FASB Proposes Improvements to 2023 GAAP Reporting Taxonomy

    The Financial Accounting Standards Board (FASB) is seeking comments, until November 03, 2022, on the proposed technical and other conforming improvements for the 2023 GAAP Financial Reporting Taxonomy.

    November 03, 2022 WebPage Regulatory News
    News

    ECB Sets Deadline for Banks to Meet Its Climate Risk Expectations

    The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.

    November 02, 2022 WebPage Regulatory News
    News

    ESAs, ECB, & EC Issue Multiple Regulatory Updates for Financial Sector

    Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)

    October 31, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8588