APRA proposes amendments to its 'final' harmonised and enhanced risk management requirements

NEED TO KNOW

On 8 May 2014, APRA released a letter to all CEOs of authorised deposit-taking (ADI) institutions, general insurers and life companies to clarify its intent with respect to certain specific risk management matters in relation to:

• APRA Prudential Standard CPS 220 Risk Management (CPS 220); and
• draft APRA Prudential Practice Guide CPG 220 Risk Management (CPG 220).

The matters being refined relate to the:

• use of the word "ensure" in the context of a board's risk management framework and the role played by the board;
• three lines of defence risk management model consisting of management, a Board Risk Committee and a Board Audit Committee; and
• inclusion of a concept of materiality for the purposes of a board's risk management declaration.