The Australian Prudential Regulation Authority has written to banks, insurers and superannuation funds setting out minimum expectations for readiness for geopolitical shocks. The letter does not create new prudential requirements, but tells regulated entities to apply existing standards more effectively so geopolitical risk is built into governance, risk management and crisis preparedness for both financial and non-financial threats. The expectations span six areas: enterprise risk, operational resilience, personnel risk, political risk, financial resilience and crisis preparedness. APRA wants boards to ensure geopolitical risk is reflected in strategy, risk appetite and oversight, with management reporting on material exposures, offshore dependencies and service provider vulnerabilities. Entities are expected to strengthen preparedness for sanctions, restricted market access, capital mobility constraints, foreign interference, insider threats, cyber attacks, disinformation and disruption to offshore operations or assets. Capital and liquidity planning and investment stress testing should routinely consider severe but plausible scenarios including market closure, sanctions, capital trapping and funding stress. The move follows supervisory work that found common gaps, including limited consideration of nation-state actions in business and funding plans, boards still developing technical literacy on AI-related risks, and crisis exercises that do not sufficiently test decision-making and communication under stress. APRA said its 2026-27 Corporate Plan will continue to focus on lifting geopolitical risk readiness, including targeted readiness assessments for a broader group of larger entities with heightened exposure across banking, insurance and superannuation. Those assessments will focus on crisis preparedness, personnel risk and political risk. Entities outside that group are expected to take a risk-based and proportionate approach through routine supervision, and APRA said it will take supervisory action where it finds heightened exposure, weak governance or inadequate preparedness.
Australian Prudential Regulation Authority2026-06-17
Australian Prudential Regulation Authority sets minimum expectations on geopolitical shock readiness and plans targeted assessments
The Australian Prudential Regulation Authority has told banks, insurers and superannuation funds to strengthen readiness for geopolitical shocks under existing prudential standards rather than through new rules. Its minimum expectations cover governance, operational and personnel resilience, sanctions and offshore exposures, financial stress testing and crisis response. APRA will also run targeted readiness assessments for larger entities with heightened exposure and may take supervisory action where gaps persist.