Document ID: chunk:federal_register_of_legislation:F2024L01319:body:0:p2
Version: federal_register_of_legislation:F2024L01319
Segment Type: other
Provision Reference: 
Character Range: 3026–6126

on an exercise of discretion by APRA made under a previous version of this Prudential Standard.

RSE licensees that are part of a group[2]
 1.              Where an RSE licensee is part of a corporate group, and the RSE licensee utilises group policies or functions, the Board must approve the use of group policies and functions and must ensure that these policies and functions have appropriate regard to the RSE licensee's business operations.

Operational risk financial requirement
 1.              An RSE licensee must maintain, manage and utilise, in accordance with this Prudential Standard, financial resources to protect beneficiaries from losses due to operational risks[3] that relate to the RSEs within its business operations.[4]

ORFR strategy
 1.          An RSE licensee must formulate and give effect to an ORFR strategy that sets out how it will meet the ORFR. At a minimum, the ORFR strategy must include the RSE licensee's:
         1.           ORFR target amount and tolerance limit, including how and why it has determined these amounts to be appropriate;
         2.           processes and parameters for determining when and how the ORFR financial resources can be used;
         3.           approach to holding the ORFR financial resources, including how the RSE licensee will ensure that the requirements in paragraphs 16 and 17 (as applicable) are met on an ongoing basis;
         4.           investment strategy for operational risk reserves held to meet the ORFR target amount;
         5.           process for implementing a replenishment plan in accordance with paragraph 18 (replenishment plan);
         6.            review process for the ORFR target amount, tolerance limit and ORFR strategy; and
         7.           process for managing the financial resources held to meet the ORFR target amount in the event that the RSE licensee or RSE is wound up.
 2.          The Board must approve the ORFR strategy and is ultimately accountable for ensuring the implementation of the RSE licensee's ORFR strategy.

ORFR target amount and tolerance limit
 1.          For the purposes of paragraph 9, an RSE licensee must determine:
         1.           a target amount of financial resources (ORFR target amount); and
         2.           a tolerance limit below the ORFR target amount (tolerance limit). Where ORFR financial resources fall below the tolerance limit, the RSE licensee must take action to replenish financial resources to meet the ORFR.
 2.          An RSE licensee's ORFR target amount and tolerance limit must be determined on a prudent basis that suitably reflects:
         1.           the RSE licensee's operational risk profile and risk assessments;
         2.           the uses of the ORFR financial resources permitted under paragraph 15; and
         3.           the size, business mix and complexity of the RSE licensee's business operations.
 3.          If APRA considers that the ORFR target amount and/or tolerance limit set by the RSE licensee does not adequately reflect the requirements of this Prudential Standard, APRA may