APRA Releases New Guidelines to Enhance Operational Risk Management for Financial Institutions

Finance

Article: The Australian Prudential Regulation Authority (APRA) has recently published its finalised prudential practice guide aimed at assisting banks, insurers, and superannuation trustees in improving their management of operational risk and enhancing business continuity planning. Operational risk refers to the potential losses that can occur due to inadequate internal processes, systems, or human errors.

The new guide, known as Prudential Practice Guide CPG 230 Operational Risk Management (CPG 230), serves as a practical tool to support the implementation of Prudential Standard CPS 230 Operational Risk Management (CPS 230), which was finalized last year and will come into effect on July 1, 2025.

APRA’s focus lies in ensuring the resilience of critical operations and strengthening third-party risk management. In response to industry feedback, APRA has made several changes to the new guidance. These changes aim to maintain high industry standards while considering the compliance burden on smaller entities, allowing them to remain competitive.

Operational resilience is of increasing significance in the digital age, as disruptions to financial services can have a significant impact on individuals who rely on these services for savings, transactions, recovery from financial loss, and retirement support.

APRA’s role as the prudential regulator of the financial services industry is to oversee and supervise various institutions, including banks, insurers, and superannuation funds, with a focus on safeguarding the interests of Australian depositors, policyholders, and superannuation fund members. With around $9 trillion in assets under its supervision, APRA plays a crucial role in maintaining the stability and security of the financial system.

For further details, the response paper can be accessed on the APRA website under “Response to submissions – CPG 230 Operational Risk Management.” For additional information, please contact APRA’s Media Unit at +61 2 9210 3636 or reach out to APRA directly at 1300 558 849.

Source