For the first time, APRA has integrated annual policy and supervision priorities with data initiatives, merging what used to be separate reports. This shift is designed to offer greater transparency and assist regulated entities with forward planning.
APRA’s key initiatives for 2024-25 are geared towards addressing the turbulent global financial climate experienced last year and ensuring readiness for future challenges. Notably, APRA’s priorities include:
- Reinforcing bank capital and liquidity standards based on lessons from recent global banking disturbances;
- Boosting operational resilience with the new Prudential Standard CPS 230 Operational Risk;
- Elevating industry practices in cyber risk management;
- Instituting APRA’s inaugural system stress test to evaluate financial system interconnections;
- Raising awareness about the financial implications of climate risks in decision-making processes;
- Collaborating with stakeholders to minimize the protection gap in household insurance;
- Coordinating with the Australian Securities and Investments Commission to ensure superannuation trustees comply with the retirement income covenant requirements.
Internally, APRA will focus on strengthening its workforce, ensuring its employees are well-equipped to navigate an increasingly complex financial environment. The infusion of funds from the 2024-25 Federal Budget will bolster APRA’s capabilities in data collection and analysis.
John Lonsdale, APRA Chair, emphasized the importance of this plan in maintaining financial and operational resilience amidst ongoing geopolitical volatility and economic uncertainty. He noted, “In the face of considerable global uncertainty, it is crucial for financial institutions to be prepared for any possible challenges.”
APRA aims to deepen its focus on operational and cyber resilience, considering the growing interconnection and dependence on digital technologies. This will involve scrutinizing the synergy between banking and superannuation and the resultant contagion risks.
Highlighting the policy domain, Lonsdale remarked that with a decade-long enhancement of the prudential framework in place, the focus would now be on sustaining its robustness. This includes readjusting existing settings and a planned overhaul of governance standards within the next twelve months.
In the realm of supervision, APRA will maintain a keen eye on risk culture and management. Key focus areas for the coming year will include climate change and crisis preparedness, alongside a robust enforcement policy to ensure compliance and safeguard the community.
For more details on APRA’s comprehensive approach and specific initiatives, the 2024-25 Corporate Plan can be found on the APRA website, exemplifying their commitment to adapt and respond to emerging risks and ensuring the resilience of Australia's financial system.
