Document ID: chunk:federal_register_of_legislation:F2019L00669:body:0:p6
Version: federal_register_of_legislation:F2019L00669
Segment Type: other
Provision Reference: 
Character Range: 14143–17385

for the group to adequately and consistently identify, measure, monitor, and manage its material liquidity risks. The policy must include a strategy that ensures the group has sufficient liquidity to meet its obligations as they fall due, including in stressed conditions, and outline processes to identify existing and potential constraints on the transfer of funds within the group. The Head of a group must submit to APRA a copy of its group liquidity management policy as soon as practicable, and no more than 10 business days, after Board approval.
18.         Where an institution within the group that is not an APRA-regulated institution engages in business activities that may pose a material risk to the group, the Head of the group must ensure that the risk management framework addresses the risks posed by that institution to the group and depositors, policyholders or RSE beneficiaries.[4]

Risk management framework
19.         An APRA-regulated institution must maintain a risk management framework for the institution that enables it to appropriately develop and implement strategies, policies, procedures and controls to manage different types of material risks, and provides the Board with a comprehensive institution-wide view of material risks.[5]
20.         The risk management framework is the totality of systems, structures, policies, processes and people within an institution that identify, measure, evaluate, monitor, report and control or mitigate all internal and external sources of material risk. Material risks are those that could have a material impact, both financial and non-financial, on the institution or on the interests of depositors and/or policyholders.
21.         The risk management framework must be consistent with the business plan required under paragraph 31.
22.         The risk management framework must provide a structure for identifying and managing each material risk to ensure the institution is being prudently and soundly managed, having regard to the size, business mix and complexity of its operations.
23.         The risk management framework must, at a minimum, include:
       (a)          a risk appetite statement;
       (b)          an RMS;
       (c)          a business plan;
       (d)          policies and procedures supporting clearly defined and documented roles, responsibilities and formal reporting structures for the management of material risks throughout the institution;
       (e)          a designated risk management function that meets the requirements of paragraph 37;
       (f)           an Internal Capital Adequacy Assessment Process (ICAAP)[6];
       (g)          a management information system(s) (MIS) that is adequate, both under normal circumstances and in periods of stress, for measuring, assessing and reporting on all material risks across the institution; and
       (h)          a review process to ensure that the risk management framework is effective in identifying, measuring, evaluating, monitoring, reporting, and controlling or mitigating material risks.
24.         The risk management framework must include forward-looking scenario analysis and stress testing programs, commensurate with the institution's size, business mix