The Australian Prudential Regulation Authority (APRA) has announced that its new operational risk management regulation, Prudential Standard CPS 230, will come into effect on July 1, 2025. The regulation requires banks, insurers, and superannuation trustees to strengthen their management of operational risks and improve business continuity planning. Financial institutions now have less than a year to comply with the new standards.
The regulation, which is detailed in the Prudential Practice Guide CPG 230, aims to enhance the resilience of critical operations, with a focus on third-party risk management. This move is part of broader efforts to address challenges such as the growing complexity of the financial services sector, with Open Banking raising new risks that organizations must be prepared to handle effectively.
As firms prepare for the changes, the role of compliance management is taking on increased importance. Traditionally viewed as a cost center, compliance is now being seen as an integral part of a company’s long-term strategic planning. Effective compliance management can offer operational resilience, improve reputation, and enhance business outcomes, making it a competitive advantage rather than a mere regulatory obligation.
To meet the demands of CPS 230, many financial institutions are adopting innovative technologies, including digital twins, which are virtual replicas of an organization’s operations. These technologies help simulate and test processes before they are implemented across the business. By using AI-powered tools and low-code technologies, financial services organizations can streamline compliance processes, enhance risk management, and make more informed decisions. These tools also provide real-time reporting and help identify regulatory changes as they happen, improving both efficiency and productivity.
While the regulatory landscape continues to evolve, CPS 230 highlights the importance of technology and automation in adapting to change. Embracing these tools enables financial institutions to not only ensure compliance but also create a resilient and profitable business model that is ready for future challenges.
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