A message from APRA Special Projects Director, Heidi Richards

We are now entering the third quarter of 2020, and Australia – and the world – continues to grapple with the health, social and economic impacts of the pandemic. 

Over this period, APRA's focus has been on resilience –the ability of a company to continue or quickly recover providing goods and services in the face of a sudden shock. As a prudential regulator, it is APRA’s role to make sure financial institutions are resilient in both financial and operational dimensions. 

In the current environment with physical distancing becoming the norm, the inability to take an overseas holiday or visit a restaurant is disappointing and inconvenient to many. Indeed, the community’s radically changed shopping, leisure and physical working conditions have required businesses in many cases to overhaul their operations and even rethink business models. While personally disruptive and frustrating, most of us have been able to find a way to live with these restrictions.

However, against the backdrop of these disruptions throughout the community, the continued operation of Australia’s banks, insurers and superannuation funds is non-negotiable. These institutions must keep operating, given the indispensable role they play in everyday life, including enabling people to receive wages or welfare payments, insure their homes and vehicles against damage, and buy food and essential services.

In fact, in the face of the unprecedented scale and scope of the disruptions caused by COVID-19, APRA-regulated financial institutions have been quick to effectively adapt to new ways of operating. Financial institution employees have worked under difficult conditions to ensure continued resilience of vital financial services. This has been critical in underpinning economic activity and confidence over this period. That doesn’t mean there haven’t been lessons learned, and in this edition of APRA Insight, we take a closer look at how APRA has supervised the issue of operational resilience across regulated financial institutions.

APRA itself has also needed to display operational resilience by adapting to new ways of working. As with many other businesses, APRA’s workforce has largely worked from home since March, requiring changes to a whole range of practices, including supervision. In this edition of Insight, we reveal how APRA has changed the way it supervises entities in an environment where face-to-face meetings are no longer possible.

This issue of Insight also has a special focus on the topic of liquidity; firstly – what is liquidity in the banking sector, and why does it matter? And secondly, we look at superannuation liquidity, and analyse how it’s been impacted by the temporary early release of superannuation scheme.

Finally, we look to the future as we release the results of APRA’s first InsurTech survey of the general insurance industry.

This issue of Insight also includes a short reader survey.  Please take a few minutes to complete it, and help us shape future editions of APRA Insight.