APRA responds to emerging risks in 2023-24 Corporate Plan

The Australian Prudential Regulation Authority (APRA) has unveiled its latest Corporate Plan designed to preserve the soundness and stability of the banking, insurance and superannuation industries.

The 2023-24 Corporate Plan outlines an evolution in APRA’s priorities for the coming four years in response to new and developing risks impacting the global financial system.

Among the considerations shaping the updated approach are rising interest rates and high inflation, geopolitical instability, the growing threat of cyber-attacks and scams, and the increased frequency of natural disasters. APRA has also responded to lessons learned from the collapse of Silicon Valley Bank and the takeover of Credit Suisse in March this year, as well as the findings of the Financial Regulator Assessment Authority on APRA’s approach to supervising the superannuation industry.

APRA Chair John Lonsdale said: “Two years after APRA first based its Corporate Plan around the twin themes of ‘protected today’ and ‘prepared for tomorrow,' that philosophy still underpins our work.

“The actions we take and areas we focus on, however, cannot remain static. As new risks emerge or accelerate, increasingly driven by technological innovation, our agenda continues to evolve in response to the changing operating environment.”

Among APRA’s key priority areas over the plan’s horizon are: 

• addressing system-wide risks by enhancing cross-industry stress-testing, and ensuring macroprudential policy settings remain appropriate for the operating environment; 
   
• a heightened focus on operational resilience, including cyber resilience, crisis management and operational risk management, to maintain the continuity of critical financial services; 
   
• climate-related financial risks, including a Climate Vulnerability Assessment for general insurers and embedding climate risk in APRA’s approach to supervision; and
   
• improving superannuation transparency to provide members with enhanced insights about investment performance and increasing APRA’s focus on retirement outcomes.

Additionally, APRA will progress plans to modernise the prudential architecture, transform its use of technology and data to sharpen industry supervision and increase transparency, and further cultivate an agile, engaged workforce that is equipped to respond to new and emerging issues.

“As the global health and economic challenges of the past few years have demonstrated, threats to financial stability can emerge quickly and in ways we’ve not previously seen. By closely monitoring the external environment and adjusting our supervision approach accordingly, APRA aims to ensure Australia’s financial institutions are prepared to withstand severe shocks and remain a source of strength for the community,” Mr Lonsdale said. 

The 2023/24 Corporate Plan is available on the APRA website at: APRA Corporate Plan 2023-24.