Regulator

Home  /  Regulator  /  APRA releases snapshot in Risk Culture

APRA releases snapshot in Risk Culture

October 18, 2016  //  by   Comments Off on APRA releases snapshot in Risk Culture

On 18 October 2016, APRA released an information paper which provides a snapshot of current practice in risk culture across the financial services industry in Australia.

What is Risk Culture?

Risk culture is described as the organisational culture on how risks are managed. It is how staff identify, control, mitigate and monitor risks in the Group.

While APRA acknowledges the progress made in the industry to focus on risk culture, momentum will need to be maintained with increased attention by APRA-regulated institutions to improve their understanding and management of risk.

Prudential Standard

APRA’s go-to document is Prudential Standard CPS 220 Risk Management which has been in place since January 2015.  APRA Chairman Wayne Byres has called upon the industry to sustain focus on strengthening risk culture.

“It’s the responsibility of each institution’s leadership – led by their CEO and supported by their Board of Directors – to ensure they have a sound risk culture that supports its ability to operate in accordance with its strategy and risk appetite. This is not an easy task, but nonetheless it is critically important for an institution’s long-run health,’ Mr Byres said.

APRA recognises that it cannot regulate culture, however it will apply higher supervisory oversight on institutions unable or unwilling to address behaviours that are inconsistent with prudent risk management practice.

The prudential regulator states it will work to identify practices that are associated with sound, and less sound, risk cultures, and share those observations with regulated institutions and other stakeholders.  APRA is also reviewing remuneration practices to examine how these interact with risk culture.

A link to the information paper may be found here:

 

Information Paper: Risk Culture

Filed Under: Regulator Tagged With:

Comments are closed.