APRA’s new regime on risk management

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By Bob Austin and Mark Standen

Recently, the Australian Prudential Regulation Authority (APRA) released a package of governance measures for banks and general and life insurance companies. The new measures include Prudential Standard CPS 220 Risk Management, which will commence on 1 January 2015. They articulate an approach to good governance that was developed after the global financial crisis by supervisors across the world and foreshadowed by APRA chairman John Laker in an important speech delivered in February 2013.

APRA’s package, released on 31 January 2014, consists of the new CPS 220 Risk Management and the revised CPS 510 Governance, together with APRA’s Response to Submissions and a draft Prudential Practice Guide CPG 220 Risk Management, on which comments are invited by 28 March 2014.

The new measures will apply to ‘APRA-regulated institutions’ comprising authorised deposit-taking institutions (ADIs) including foreign ADIs, general insurers, life companies and single industry groups (Level 2). It will also apply to conglomerate groups (Level 3 groups). It will not apply to the superannuation industry. Registrable superannuation entity (RSE) licensees are required to comply with Prudential Standard SBS 220 Risk Management, which commenced on 1 July 2013…

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