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March 6, 2013

Capital and risk for ADI’s and insurers

APRA has released a package of final guidance material to all authorised deposit-taking institutions (ADIs), general insurers, Level 2 general insurance groups (L2 groups) and life companies relating to capital and risk.

CPG 110 contains prudential guidance on maintaining adequate capital and responding to severe levels of stress and trigger events.

CPG 110 emphasises that:

"Under the capital standards, the Board of a regulated institution has primary responsibility for the capital management of that institution. This obligation goes beyond the need to ensure compliance with regulatory capital requirements and requires the Board to ensure that each regulated institution holds capital resources commensurate with its risk profile....

The Board is responsible for the risk appetite of a regulated institution and for ensuring that the institution has an appropriate risk management framework. Risk appetite is a fundamental part of both risk management and capital management."

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Posted 6th March 2013 by David Jacobson in Corporate Governance, Financial Services