There may be “a change in the intensity of supervision that APRA applies for some entities” the prudential regulator said yesterday.

APRA has spelled out its plans to “transition to a new Supervision Risk Intensity Model” under which “APRA has updated its supervision philosophy and developed a new risk assessment model that will replace the existing PAIRS and SOARS framework …. which has served APRA well for almost two decades”.

The SRI Model and its design features “ensure greater elevation of non-financial risks whilst preserving the importance of financial resilience,” APRA said.

“It also introduces recovery and resolution considerations, and more systematically factors in the impact of the external environment on an entity’s risk profile.

“The new model better caters for industry nuances, and is aligned with APRA’s enforcement approach to ensure a timely and appropriate supervisory response to identified risks.”

APRA said the transition from PAIRS and SOARS to the SRI Model is underway “and will be completed by June 2021”.

“The move to the SRI Model could lead to a change in the intensity of supervision that APRA applies for some entities.

“This is a function of the additional risk categories, coupled with the enhanced assessment of systemic importance of entities and the consequent need for a more in-depth risk assessment.”

APRA will conduct a series of webinars in November 2020 to provide an overview of the new SRI model and answer any questions.