Objective and key requirements of this PObjective and key requirements of this Prudential Standard

Objective and key requirements of this Prudential Standard

This Prudential Standard sets out the requirements for a general insurer and a Level 2 insurance group to maintain a risk management framework and strategy that is appropriate to the nature and scale of its operations.

The ultimate responsibility for the general insurer’s and Level 2 insurance group’s risk management framework and strategy rests with its Board of directors or, in the case of a Category C insurer, the senior officer outside Australia with delegated authority from the Board.

A general insurer’s and Level 2 insurance group’s systems, processes, structures, policies and people for identifying, assessing, mitigating and monitoring risks are referred to in this Prudential Standard as the risk management framework.

The key requirements of this Prudential Standard are that a general insurer and a Level 2 insurance group must:

• have in its risk management framework a documented Risk Management Strategy and include sound risk management policies and procedures, and clearly defined managerial responsibilities and controls;

• submit its Risk Management Strategy to APRA when material changes are made;

• have a dedicated risk management function (or role) responsible for assisting in the development and maintenance of the risk management framework;

• submit a three-year Business Plan to APRA and re-submit after each annual review and when any material changes are made;

• submit a Risk Management Declaration to APRA on an annual basis; and

• submit a Financial Information Declaration to APRA on an annual basis.