Australia’s New Operational Risk Rules Shift Focus to Real-World Disruptions

Key Takeaways

• CPS 230 Now in Force: APRA’s new Operational Risk Management standard takes effect as of July 1, 2025, raising the bar for banks, insurers, and superannuation funds.
• Focus on Critical Services: Entities must identify their most important business services and determine how long they can withstand severe disruptions.
• Rigorous Testing Required: Organizations must regularly test business continuity plans to expose operational vulnerabilities before real-world crises hit.
• Third-Party Risk in the Spotlight: CPS 230 introduces tougher requirements for managing material service providers, pushing firms to rethink where responsibility begins and ends.
• New Regulatory Visibility: APRA now requires firms to submit a list of their most critical third-party vendors, helping identify systemic concentration risks across the financial sector.

Deep Dive

Australia’s banks, insurers, and superannuation funds are officially on the hook for doing a lot more than hoping things don’t go wrong. With the Australian Prudential Regulation Authority’s CPS 230 Operational Risk Management now in effect, financial institutions must prove they’re ready to weather disruptions that could bring the system, and millions of lives, to a standstill.

In a world where a single ransomware attack can block access to your savings, delay an insurance payout, or freeze superannuation accounts, APRA’s message is clear: prepare now, because disruptions are no longer a matter of if, but when.

CPS 230 demands more than technical upgrades, it requires a change in mindset. Under the new cross-industry standard, institutions must:

• Pinpoint the services most essential to customers and assess how long they could stay afloat if those services are compromised.
• Test their continuity plans like it’s game day, not just once, but routinely, to uncover blind spots before real-world disruptions do.
• Get serious about third-party risk. That means understanding and managing the risks posed by key service providers who often operate behind the scenes, yet hold the keys to critical systems.

APRA Member Therese McCarthy Hockey didn’t mince words when explaining why these changes matter, “Australians depend on banking to pay for goods and services, insurance helps us rebuild after a flood or fire and pay for vital medical treatments, while superannuation supports us to maintain a dignified lifestyle in retirement,” she said. “In an environment where one crashed server or ransomware attack could leave millions without access to these essential services, effective operational risk management is vital for financial stability and community wellbeing.”

What’s particularly striking about CPS 230 is its insistence on shared accountability. Institutions can’t just outsource a function and wash their hands of the risk. They now need a detailed understanding of their most critical service providers, how they operate, where they might fail, and how those failures will be mitigated.

“This will require an entirely new mindset about where the boundaries of responsibility sit,” McCarthy Hockey added.

APRA hasn’t sprung this overnight. The regulator has spent the past two years working closely with the industry to support implementation, offering an extra year of breathing room for smaller or less complex entities to comply with some of the new demands.

One interesting new requirement? Entities must submit a list of their most material third-party providers. It’s not just for show, APRA will use it to map out concentration risks across the sector, a move that could uncover hidden points of fragility in Australia’s financial backbone.

If 2024 taught us anything, it’s that resilience can’t be reactive. And while CPS 230 doesn’t promise perfection, it does push Australia’s financial institutions to be faster, smarter, and far better prepared.

Because when the stakes are this high, good intentions aren’t enough. Resilience has to be real.

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