APRA releases update on new operational risk standard’s implementation

APRA releases update on new operational risk standard’s implementation | Insurance Business Australia

Insurance News

APRA releases update on new operational risk standard’s implementation

It aims to improve operational risk management in three industries

Insurance News

By
Roxanne Libatique

The Australian Prudential Regulation Authority (APRA) has published an updated timeline for the implementation of the new cross-industry operational risk standard.

Prudential Standard CPS 230 Operational Risk Management (CPS 230) aims to strengthen operational risk management in the insurance, banking, and superannuation industries.

In response to the feedback received during the consultation period, APRA will:

move the new standard’s effective date to July 1, 2025; and
provide transitional arrangements for pre-existing contractual arrangements with service providers, with the standard’s requirements applying from the earlier of the next contract renewal date or July 1, 2026.

APRA will release the final version of CPS 230, together with draft supporting guidance, in mid-2023.

More about the new operational risk standard

In July 2022, APRA released a consultation paper on CPS 230, which will set minimum standards for managing operational risk, including updated requirements for business continuity and service provider management.

“Disruptions to financial services – even temporarily – can have a major detrimental impact on the community. In strengthening the ability of APRA-regulated entities to identify, manage, and respond to operational risk events, APRA is seeking to enhance operational and financial resilience, as well as financial stability,” the former APRA Chair Wayne Byres said in a previous statement. “The proposed CPS 230 will also help ensure APRA-regulated entities meet the challenges posed by ongoing innovation and technological change in the financial services industry.”

During the same year, Stuart Bingham – general manager of governance, culture, remuneration, and accountability at APRA – highlighted the results of the regulator’s risk culture surveys across 61 regulated entities in insurance, banking, and superannuation. He delved into the risk culture issues in APRA-regulated entities, specifically why a strong risk culture is significant to achieve prudential soundness and financial success.