Retirement of GPG 250 and LPG 250
To: All general insurers and life insurers
As outlined in APRA’s 2023-24 Corporate Plan, a key strategic initiative is Modernising the Prudential Architecture (MPA), which aims to make the prudential framework clearer, simpler and more adaptable.
One element of this initiative is improving the approach to prudential guidance, including ensuring it is relevant and up-to-date. APRA is therefore seeking to retire out-of-date Prudential Practice Guides (PPGs) that are no longer considered to add meaningful value in understanding the current prudential requirements.
APRA has identified two PPGs for retirement:
- Prudential Practice Guide GPG 250 Balance Sheet and Market Risk (GPG 250)
- Prudential Practice Guide LPG 250 Asset and Liability Management Risk (LPG 250)
GPG 250 and LPG 250 were created in 2006 and 2007, respectively. Both PPGs provide high level guidance on elements that would typically be included in a risk management framework. APRA considers that these PPGs have served their initial purpose of explaining basic concepts to help uplift industry practice but are now no longer needed.
APRA’s expectations regarding risk management, including those risks considered in GPG 250 and LPG 250, are set out in Prudential Standard CPS 220 Risk Management (CPS 220). CPS 220 was last revised in July 2019, and applies to all APRA-regulated institutions. CPS 220 mandates that an APRA-regulated institution must maintain a risk management framework that is appropriate to the size, business mix and complexity of the institution or group. The risk management framework must, at a minimum, address the following material risks:
(a) credit risk;
(b) market and investment risk;
(c) liquidity risk;
(d) insurance risk;
(e) operational risk;
(f) risks arising from the strategic objectives and business plans; and
(g) other risks that, singly or in combination with different risks, may have a material impact on the institution.
CPS 220 is supported by Prudential Practice Guide CPG 220 Risk Management. Accordingly, GPG 250 and LPG 250 are no longer required and will be retired effective immediately.
APRA will continue to identify opportunities for simplification and harmonisation within the prudential framework, as part of MPA.
Yours sincerely,
Clare Gibney
Executive Director
Policy & Advice