APRA Corporate Plan 2016-2020

The Corporate Plan (PDF version) sets out information on APRA’s key strategies and activities over a rolling four year period. Publication of a corporate plan is a core element of the Public Governance, Accountability and Performance Act 2013 (PGPA Act).


Executive Summary

The Australian Prudential Regulation Authority (APRA) is an independent statutory authority established for the purposes of prudential supervision of financial institutions and for promoting financial system stability in Australia. In performing this role, APRA is responsible for, in particular, protecting the interests of depositors, insurance policyholders and superannuation fund members – collectively referred to as APRA’s beneficiaries. The financial interests of these beneficiaries lie at the centre of APRA’s mission.

APRA’s approach is to supervise institutions with a combination of regulation and active supervision, with a focus on principles rather than prescription, an emphasis on outcomes rather than process, and an intensity which reflects both risk and systemic importance. APRA does this by having highly skilled and engaged people supported by strong leaders within a values-aligned culture, and a robust and efficient organisation with secure and reliable infrastructure.

APRA seeks to manage failures or near-failures of regulated institutions in an orderly fashion, in order to protect beneficiaries and minimise adverse effects on the wider economy.

APRA’s core operational activities - supervision, policy and resolution - are the foundations for achieving its mission and are stable over time. These core functions are enabled by APRA’s core capabilities: its people and culture, organisational effectiveness and infrastructure.

APRA’s planning horizon is four years. Each year, APRA reviews its operating environment to identify risks and opportunities that may be relevant to the successful delivery of its mission. Over the next four years, APRA will strengthen its core functions and capabilities through delivery of its strategic initiatives:

  • Enhancing leadership, culture and opportunities for APRA’s people
  • Honing governance and workplace effectiveness
  • Sharpening risk-based management
  • Building recovery and resolution capability

APRA's role for the Australian community is to ensure financial safety, promote financial system stability, balanced with efficiency, competition, contestability, and compeptitive neutrality. This is achieved through APRA's core functions and capabilities: supervision, policy, resolution, people and culture, organisational effectiveness and infrastructure. Strengthened by APRA's strategic initiatives: enhancing leadership, culture and opportunities for our people, honing governance and work place effectiveness, sharpening risk-based management, building recovery and resolution capability. Underpinned by APRA's values of integrity, collaboration, foresight, professionalism and accountability.

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Letter to Treasurer, Hon Scott morrison, MP, signed by Wayne Byres, 25 August 2016

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Introduction



APRA’s long term strategic direction is shaped by its vision, role and mission, and the values it seeks to demonstrate. Some of the elements of this broad governing framework are set in legislation but others are dynamic and need to be kept under review as circumstances change.

Our vision

Our vision is to be a world-class prudential regulator, with excellence of supervision as our foundation.

Our mission

Our mission is to establish and enforce prudential standards and practices designed to ensure that, under all reasonable circumstances, financial promises made by institutions we supervise are met within a stable, efficient and competitive financial system.

APRA also acts as a national statistical agency for the Australian financial sector, plays a role in preserving the integrity of Australia’s retirement incomes policy and administers the Financial Claims Schemes.

Our role

APRA is the prudential supervisor and resolution authority for the majority of the Australian financial sector. It oversees Australia’s banks, credit unions, building societies, general, life and private health insurers, reinsurers, friendly societies and most of the superannuation industry. APRA is funded largely by the industries that it supervises. APRA currently supervises institutions holding over $5.5 trillion in assets for Australian depositors, policyholders and superannuation fund members.

APRA regulates and supervises institutions in the financial sector in accordance with various laws of the Commonwealth, including industry-specific Acts. These Acts in turn mandate APRA to protect the interests of APRA’s beneficiaries.

In performing and exercising its functions and powers, APRA is to balance the objectives of financial safety and efficiency, competition, contestability and competitive neutrality and, in balancing these objectives, is to promote financial system stability in Australia.

Our values

APRA’s culture is founded on its values. APRA staff value and demonstrate integrity, collaboration, professionalism, foresight and accountability. These values, evident in its day-to-day work practices, underpin APRA’s commitment to the Australian community to promote financial system stability and financial safety. APRA’s leadership actively promote these values, through empowering staff, being adaptable, holding themselves and others accountable, and providing clarity on decisions and desired outcomes.

Our core functions

APRA meets its purpose through its core functions, which reflect its role as a prudential supervisor and resolution authority. These are stable over time.

Supervision Protect beneficiary interests and promote financial stability by identifying and responding to significant risks in a timely and effective manner.
Policy Protect beneficiary interests by maintaining a robust prudential framework that minimises the risk of loss to beneficiaries and promotes financial stability.
Resolution Protect beneficiary interests by minimising disruption to the financial system and losses in the event of a failure or crisis.

Our core capabilities

APRA’s core capabilities are its people, the way it manages the organisation and supporting infrastructure. APRA’s frameworks support achievement of APRA’s purpose, while complying with policies and legislation, maintaining high standards and making cost-effective use of the resources available to it.

People and Culture
Have highly skilled and engaged people supported by strong leaders within a values-aligned culture.
Organisational effectiveness Have robust and efficient specialist and business support and transparent and accountable practices.
Infrastructure Have secure and reliable premises, information, technology and systems that support APRA’s core operations.

Strategic initiatives

APRA’s strategic initiatives seek to strengthen its core functions and capabilities over the planning period. The strategic initiatives for 2016-2020 set out APRA’s highest priority areas for change over the next one to four years.

Enhancing leadership, culture and opportunities for APRA’s people Enhancements that support leaders in sustaining a progressive, high performing and inclusive culture.

- Enhance APRA’s employee value proposition
- Build inclusive leadership that inspires outcomes
- Foster APRA’s desired culture
Honing governance and workplace effectiveness Fostering aligned, simplified and agile governance structures and workplaces.

- Simplify and align APRA’s governance arrangements
- Refresh and reinvigorate APRA’s workplaces and practices
- Modernise APRA’s data and analytical capabilities
Sharpening risk-based management Improving support for risk judgments, priority setting and resource management through tools and more structured risk intelligence and benchmarks.

- Inform judgements through clear risk appetite and strengthened risk intelligence
- Improve APRA’s risk and performance assessment and reporting capability
- Formalise quality management practices
- Enhance resource management practices
Building recovery and resolution capability Building a clear and effective failure framework underpinned by improved internal and external readiness.

- Develop a materially stronger framework for managing failure
- Improve APRA’s internal readiness to resolve failures and near-failures
- Improve recovery planning
- Develop resolution planning

APRA’s operating environment



The Australian financial system remains in a sound position. However, against a backdrop of significant global uncertainty, risks to institutions or financial stability may emerge quickly and APRA needs to be proactive and positioned to respond. APRA’s supervision is conducted within an environment of domestic and global policy change, with a range of recent policy reforms still being implemented by institutions and further reforms to come during the planning period.

The global setting

The outlook for global growth remains subject to significant uncertainty. The forecasts reflect below-average growth for the global economy and expectations of low interest rates. Global events, including the United Kingdom’s decision to leave the European Union, a slowdown in economic growth in China, questions about the strength of the European banking system and rising geopolitical tensions have all led to recurring bouts of volatility in the equity, bond and foreign exchange markets. Negative interest rates are now featured across a growing share of government debt around the world. As a result, the potential for events to continue to cause financial stress across a number of markets remains elevated.

The domestic setting

In Australia, economic growth is expected to be a little below trend over the coming year. At the same time, there are no signs of a material downturn on the horizon, with the unemployment rate remaining fairly steady over the first half of 2016, and interest rates at very low levels to support economic activity.

Although the general picture is one of a broadly healthy Australian financial system, there remain some areas of vulnerability. These include risks in residential and commercial property markets, the funding profile of the banking system, poor experience in some segments of the insurance market, and the need to further strengthen governance and transparency in the superannuation industry.

The international experiences from the global financial crisis highlighted the importance of the preparedness of APRA, the public sector more generally and regulated industries, to respond to and deal with the failure, or near-failure, of one or more institutions. This includes the need to improve the Australian statutory and prudential framework for managing failures and crises, taking into account international lessons and policy developments, as recommended by the Financial System Inquiry.

The Government’s response to the Financial System Inquiry continues to influence domestic reform. Among other matters, this includes resilience, superannuation and retirement, the payments system and aspects of the regulatory system. Integrating private health insurers into APRA’s broader prudential framework will also continue.

Heightened expectations for the demonstration of regulators’ effectiveness have led to enhanced transparency and accountability requirements for APRA, such as those included in the Public Governance, Performance and Accountability Act 2013 and the Government’s Regulator Performance Framework. There are continued expectations in regard to the efficiency of APRA and a budgetary environment that places additional emphasis on the efficient use of resources.

APRA’s ability to maintain the quality of its workforce is critical to its success as a prudential supervisor. APRA primarily recruits staff from, and loses staff to, the financial services sector and as a result, remuneration levels and recruitment activity within the financial sector significantly impact APRA’s ability to attract and retain staff. In recent years, declines in APRA’s relative positioning vis-à-vis the financial sector have created increasing challenges for APRA in maintaining the quality of its workforce and building new capabilities.

Technology trends such as cloud computing, large-scale data analytics, distributed ledgers and the increasing threat of cyber-crime have potential implications for APRA, both in its operations and as a prudential supervisor. APRA will continue to monitor technological developments and the threats and opportunities they present for regulated institutions. At the same time, APRA’s own technology and infrastructure is undergoing significant development and modernisation to deliver greater effectiveness and efficiency and to take advantage of new technologies.

Strategic risks



In the development of this Plan a review of the current internal and external factors impacting APRA’s operating environment has been undertaken, including the most significant risk areas from APRA’s Enterprise Risk Management Framework. APRA’s ability to achieve its mission would be impaired if:

  1. APRA failed to identify or respond appropriately to new or material risks in an individual institution or the financial system.
  2. APRA was insufficiently ready to respond to a failure in an institution or the financial system.
  3. APRA’s prudential policy framework was insufficiently robust to support achievement of its mission.
  4. APRA was unable to attract and retain the people needed to support its core operations.
  5. APRA’s business operations and infrastructure were insufficiently robust to deliver efficiency and effectiveness benefits, or securely manage confidential information.

Performance measures



APRA does not pursue a ‘zero failure’ regime. Rather, the objective is to maintain a low incidence of failure of regulated institutions while not impeding continued improvements in efficiency or hindering competition.

APRA’s aim is to identify likely failures early enough so that corrective action can be initiated to prevent the failure, or at least to set in train appropriate wind-up or other exit strategies to minimise losses to beneficiaries. In monitoring and assessing its performance, APRA draws on a range of indicators and qualitative information relevant to each of APRA’s core functions and capabilities. At the end of each financial year, an Annual Performance Statement is included in APRA’s Annual Report.

APRA assesses its performance in meeting its primary purpose as an effective prudential supervisor by the extent to which the Australian community is exposed to loss through the failure of a regulated institution. The two key ratios APRA uses for this purpose are the performing entity ratio (PER) and the money protection ratio (MPR).

  • The PER is an indicator of the incidence of failure amongst regulated institutions. It is determined as the number of regulated institutions that met their commitments to beneficiaries in a given year divided by the total number of regulated institutions. The higher the percentage, the lower the incidence of failure.
  • The MPR is an indicator of the incidence of loss in the financial sector. It is determined as the dollar value of liabilities to beneficiaries in Australia in a given year, less any losses due to prudential failures, divided by the total dollar value of liabilities to beneficiaries in Australia in APRA-regulated institutions. Again, the higher the percentage, the lower the incidence of loss.

Since APRA’s inception in 1998 the PER has averaged 99.92 per cent and the MPR has averaged 99.96 per cent.

How APRA achieves its purpose



APRA’s core functions

APRA achieves its purpose through its core functions. These outline the key strategies that APRA will implement to achieve its mission.

Supervision


Protect beneficiary interests and promote financial stability by identifying and responding to significant risks in a timely and effective manner.

APRA does this by

Identifying significant risks to institutions, industries or financial stability

Effective supervision involves identifying risks or likely risks at an idiosyncratic, industry and financial system level. APRA has a broad range of specialists and undertakes thematic reviews and stress testing to support supervision in identifying risks. Robust procedures for identifying and escalating significant risks support APRA’s ability to take early corrective action where warranted.

Focussing on achieving clear prudential outcomes

Effective supervision requires a clear view on the outcomes sought from supervisory activities. Identifying focused outcomes and responsive supervisory strategies to achieve those outcomes is an important part of the development of supervisory action plans and thematic reviews.

Tailoring supervision efforts and resources according to risk

As a risk-based supervisor, APRA operates within a risk appetite and prioritises attention on significant risks to which an institution, or the financial system, is exposed. This involves undertaking proactive, forward looking activities to support risk assessments, identifying key risks and responding promptly to issues of concern. Supervisory resources are applied to broadly align to the risk profile and systemic importance of institutions and reviews are undertaken to ensure quality and rigour are maintained, within and across APRA-regulated industries.

Having credible plans in place for institutions to recover from adversity

An important aspect of APRA’s work involves assessing how well institutions can manage adversity and stress. Supervisors assess the credibility of contingency plans and how well the institution has integrated these in its risk management framework. Where the need has been identified, APRA assesses whether institutions have credible and proportionate recovery plans in place.

Policy


Protect beneficiary interests by maintaining a robust prudential framework that minimises the risk of loss to beneficiaries and promotes financial stability.

APRA does this by

Reflecting all elements of APRA’s mandate and broader objectives in the prudential framework

In setting and maintaining its prudential framework APRA seeks to be transparent in how it balances financial safety with efficiency, competition, contestability and competitive neutrality and, in doing so, how this promotes financial stability.

The framework aims to protect beneficiary interests by requiring prudent practice from institutions and enabling prompt, effective and proportionate supervisory response to significant risks.

APRA aims to set requirements which are clear and well understood by institutions and supervisors. Where appropriate, requirements are principles-based and allow a range of prudent practices to achieve an outcome.

Maintaining a robust and flexible failure and crisis resolution framework

The legislative and prudential framework for failure and crisis management is critical in APRA protecting beneficiary interests and financial stability in the event of disruption or failure of an institution. APRA seeks a framework that is robust and provides flexibility as the basis for achieving an orderly failure of one or more institutions where needed.

Ensuring policy development processes are effective

APRA seeks to deliver reforms to the prudential framework through a thorough and consultative policy process consistent with the Office of Best Practice Regulation principles. APRA seeks to clearly identify and engage internally and externally on expected outcomes, constraints and alternative approaches to meet those outcomes. On legislative reform, APRA maintains strong engagement with Treasury.

APRA focuses review and development of the prudential framework on priority areas for financial system safety and stability and, where relevant, seeks reform to be founded on key international standards, as appropriate for Australian conditions.

Resolution


Protect beneficiary interests by minimising disruption to the financial system and losses in the event of a failure or crisis.

APRA does this by

Ensuring credible resolution plans are in place for institutions in case of failure

APRA aims for institutions to be appropriately prepared to recover from severe adversity themselves, supported by credible plans for effective resolution at the point of failure where necessary. This involves working with institutions to preposition for the effective implementation of resolution plans and with domestic and international counterparts to ensure readiness for cooperation where needed.

Maintaining effective operational capacity to resolve failures and near-failures

APRA continuously improves and regularly tests its operational capacity to resolve failures and near-failures in an orderly manner. Identifying any potential threats to the viability of institutions early enough so that corrective action can be promptly initiated or orderly exit achieved is key. Strong operational processes for communications, enforcement activity, maintaining or applying resolution strategies and readiness to administer the Financial Claims Schemes, if declared, in the event of an institution failing are important.

Engaging effectively with other agencies to ensure adequate support in a crisis

Considerable engagement, both domestically and, for some institutions, internationally, is necessary to effectively respond to failed and near-failing institutions. APRA has strong and ongoing engagement with the Council of Financial Regulators (CFR) agencies and other key agencies such as through the Trans-Tasman Banking Council. It undertakes regular crisis simulations to ensure co-ordination with other agencies is effective, to assess operational readiness and to identify areas of significant risk or deficient operational processes.

APRA’S core capabilities



APRA’s core capabilities are its people, the way it manages the organisation and its supporting infrastructure.

People and culture


Have highly skilled and engaged people supported by strong leaders within a values-aligned culture.

APRA does this by

Fostering a culture that promotes achievement of APRA’s mission

APRA fosters a culture that promotes staff engagement through a clear mission and established values. Staff at all levels across APRA demonstrate APRA’s values in day-to-day behaviours and work practices and internal frameworks support APRA’s culture.

Inspiring staff to achieve outcomes

APRA’s leaders and managers strive to inspire staff to achieve business outcomes through clear and consistent communications on organisational priorities, establishing inclusive workplaces and effectively engaging staff. APRA continues to build a performance-based workplace through ongoing demonstration and promotion of desired leadership and management behaviours.

Providing a compelling employee value proposition

APRA promotes a progressive, high-performing and inclusive culture through a broad range of opportunities for reward, recognition and professional and personal development. Other benefits further support staff, such as health and wellness initiatives and the promotion of flexible work arrangements.

Ensuring strategic workforce planning is effective

Contemporary approaches to strategic workforce planning, to organise work and people and embed talent management practices, aim to assist APRA in ensuring it has the right people with the right skills to achieve its goals. APRA’s specialist skills and technical capacity is built and maintained through strong recruitment and learning and development opportunities that attract and retain people with a diversity of experience, qualifications, aptitude and alignment to APRA’s culture.

Organisational effectiveness


Have robust and efficient specialist and business support and transparent and accountable practices.

APRA does this by

Having specialist support for core functions

APRA’s broad range of specialists are integral to its core functions, and include risk specialists, legal, industry and actuarial expertise and statistical, financial and industry analysis capability. APRA’s specialists support the core supervision function by enhancing its capacity to identify emerging risks in institutions and industries, maintaining supervisory frameworks and supporting APRA’s policy and resolution core functions.

Providing business support across

APRA To support its core functions, APRA seeks to maintain efficient and effective organisational frameworks and processes. These cover a wide range of areas including financial, security and information and project management and strong frameworks for the effective identification and management of strategies and risks.

Aligning governance and accountability, internally and externally

APRA strives for clear accountabilities for business outcomes through efficient and effective internal governance frameworks. APRA adopts accountability practices that meet the spirit and intent of relevant Government policies and frameworks including for internal audit, compliance and performance reporting.

Serving as a national statistical agency

The collection, reporting and publishing of statistics supports APRA’s core supervision activities and its ancillary function as a national statistical agency for the financial sector.

Engaging transparently and effectively

APRA fosters active engagement with all relevant parties, internally and externally, on key matters. APRA engages with Government and other agencies on governance and accountability frameworks applying to it. APRA strives to clearly and effectively articulate expectations and the underlying reasons for its decisions, as appropriate. Up-to-date, clear and accessible information and publications on prudential and supervision frameworks and activities are available in the public domain.

Infrastructure


Have secure and reliable premises, information, technology and systems that support APRA’s core operations.

APRA does this by

Maintaining robust, effective and secure infrastructure

APRA’s infrastructure is the backbone of its core operations. APRA maintains appropriate standards for its workplaces, including robust, effective and secure systems. Over time, APRA will continue to enhance and modernise its infrastructure.

Embracing opportunities provided by modern infrastructure

Staff are encouraged and supported to optimise the benefits of APRA’s workplaces, systems and ways of working. APRA seeks to support anytime, anywhere mobility tools and practices to facilitate this.

Ensuring information and data is available in a timely and effective manner

Achieving APRA’s purpose relies on information and data. APRA aims to collect information and data in a timely and efficient manner, store it safely and reliably, and securely provide access to the appropriate people anywhere, anytime.

Strategic Initiatives



APRA’s priorities for change are captured in its four strategic initiatives. These initiatives represent programs of work that seek to strengthen APRA’s core functions and capabilities for the four year planning period.

Enhancing leadership, culture and opportunities for APRA’s people


Enhancements that support leaders in sustaining a progressive, high performing and inclusive culture

This strategic initiative comprises a program of work to:

  • Enhance APRA’s employee value proposition
  • Build inclusive leadership that inspires outcomes
  • Foster APRA’s desired culture

Attracting and retaining the high calibre staff needed to achieve APRA’s mission requires strong leadership and the promotion of a culture and practices that support its people achieving their potential. It is also important that APRA maintains appropriate overall relativities with employment conditions, financial and non-financial, in the financial services sector.

Enhancing APRA’s employee value proposition (EVP) is designed to improve the attractiveness of APRA as an employer. APRA’s EVP identifies the unique people policies, processes and initiatives that demonstrate its commitment to APRA staff, covering areas such as remuneration, career advancement and development, leadership practices, talent and succession planning and flexible work arrangements.

Effective and inclusive leadership is integral in inspiring APRA staff towards achievement of common outcomes. Strengthening leadership skills will assist engagement and the achievement of APRA’s purpose.

The culture of an organisation sets the tone for the workplace and the behaviours expected in achieving outcomes. More clearly articulating the culture APRA would like to foster will enable internal frameworks to be better aligned to the achievement of desired outcome.

Honing governance and workplace effectiveness


Fostering aligned, simplified and agile governance and workplaces

This strategic initiative comprises a program of work to:

  • Simplify and align APRA’s governance arrangements
  • Refresh and reinvigorate APRA’s workplaces and practices
  • Modernise APRA’s data and analytical capabilities

Aligned, simplified and agile governance and workplaces strengthen the efficiency and effectiveness of APRA’s people.

Modernising APRA’s workplace and work practices through technology and work environment refreshes will deliver benefits across APRA and enhance collaboration and information management practices.

APRA aims to transform the way it collects, stores, accesses and publishes data. APRA is working to enhance public access to non-confidential data via the APRA website. The data collection platform (D2A) will be replaced with a modern solution which provides improved data collection and taxonomy management, reporting capability, security and software compatibility. APRA will also enhance its data analytics capabilities by establishing an analytics laboratory to investigate predictive analytics techniques for both structured and unstructured information and adopting techniques that improve supervision.

Sharpening risked-based management


Improving support for risk judgments, priority setting and resource management through tools and more structured risk intelligence and benchmarks

This strategic initiative comprises a program of work to:

  • Inform judgements through clear risk appetite and strengthened risk intelligence
  • Improve APRA’s risk and performance assessment and reporting capability
  • Formalise quality management practices
  • Enhance resource management practices

Risk-based management refers to APRA’s approach to managing its core operations. APRA promotes sound, forward-looking risk assessment which is clearly linked to priority setting and action.

Risk appetite provides a framework within which staff are able to inform their judgments about the risks the organisation is prepared to accept or not. Sound judgments require adequate risk intelligence, which is gathered, analysed and prepared in a timely and efficient fashion. Improved financial analysis also drives better risk analysis and priority setting for supervisors.

An integrated and accessible reporting framework on key aspects of APRA’s performance, including all relevant aspects of risk, supports APRA in managing priorities, identifying organisational vulnerabilities, driving strategic initiatives, and clarifying individual accountabilities in supporting outcomes.

A sound quality management framework is a key driver of organisational performance, as it goes to the heart of what it is to be effective as a prudential supervisor.

APRA will focus effort on formalising the framework, strengthening existing controls and ensuring that there is adequate, effective challenge across the organisation on core risk judgements, especially supervision, with opportunities to institutionalise better practices and knowledge sharing.

An integrated system that is organised to support more structured resource planning, ongoing monitoring, and review of past efforts provides structure for risk-based resource management.

Building recovery and resolution capability


Building a clear and effective failure framework underpinned by improved internal and external readiness

This strategic initiative comprises a program of work to:

  • Develop a materially stronger framework for managing failure
  • Improve APRA’s internal readiness to resolve failures and near-failures
  • Improve recovery planning
  • Develop resolution planning

This initiative seeks to develop a mature failure management framework for APRA and the capability and resources to facilitate pro-active, prompt and orderly resolution of institutions when needed.

APRA aims to improve the Australian statutory and prudential framework for managing failures and crises, taking into account international lessons and policy developments, as recommended by the Financial System Inquiry. There is further work in developing suitable prudential standards and guidance material to support the primary legislation and building a materially stronger legislative and prudential framework for failure management.

APRA aims to improve the readiness of regulated institutions to recover from severe stress by developing credible recovery plans, with a realistic and continuously reviewed menu of actions that can be practically implemented in stressed operating conditions. Credible resolution plans will also be developed to assist APRA to resolve any failed institution which may provide critical functions. APRA’s operational readiness to resolve failures and near-failures will be strengthened.

Internal readiness will be improved both broadly and in relation to administering the Financial Claims Schemes.

Roadmap for change


APRA's roadmap for change 2016-2020. Enhancing eadership, culture and opportunities for APRA's people achieved by June 2019. Honing governance and workplace effectiveness achieved by January 2020. Sharpening risk-based management achieved by December 2018. Building recovery and resolution capability will be an on-going progression.

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Risk oversight and management



Risk management is overseen by the Executive Board, and its supporting committees, in particular, the Risk Management Committee (RMC).1 The RMC coordinates its activities with APRA’s Audit Committee. Both committees are comprised of two independent non-executive members and APRA’s Deputy Chairman.

APRA’s Enterprise Risk Management Framework (ERMF) is aligned with the best practice requirements of the Commonwealth Risk Management Policy. The framework comprises a Risk Appetite Statement, a Risk Management Policy, and an Incident Management Policy, together with risk categories, risk registers and registers of mitigating controls and treatment actions and monitoring processes that are designed to support risk management practices across APRA.

APRA’s ERMF is dynamic in nature. It establishes risk owners for each risk category who regularly review the risks for which they have responsibility along with updates on mitigating actions, and suggested changes to the ERMF. These are assessed and challenged where appropriate, and a quarterly report is developed on the status of APRA’s enterprise risks and how they relate to APRA’s risk appetite.

This report is considered by the RMC, where feedback on risks and mitigating actions is obtained. APRA’s ERMF, including the Risk Appetite Statement, is reviewed on a regular basis.

1 The RMC has three members, the majority (including the chair) being independent (i.e. external appointees, not APRA executives). The RMC has a Charter that is reviewed and approved annually. It meets five times a year and formally assists the APRA Chairman and the Executive Board in their management of risks.

Financial resources



APRA’s financial resources are provided through the Government’s budgeting and related processes; the forward estimates are as set out in the table below:

  2015/16
Estimated actual
$'000
2016/17
Budget
$'000
2017/18
Forward estimate
$'000
2018/19
Forward estimate
$'000
2019/20
Forward estimate
$'000
Annual expenses 131,178 131,318 137,675 135,283 137,075

In general terms, approximately 75 per cent of APRA’s cost base is attributable to employee costs, 20 per cent to supplier costs, and the balance is depreciation and amortisation.



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