08/22/2025
Table of ContentsAs 64% of Australia’s senior executives anticipate increased financial crime in 2025, a trend fueled by cyber attacks and AI-powered threats, the Australian Prudential Regulation Authority's (APRA) CPS 230 – Operational Risk Management emerges as a landmark regulation designed to ensure long-term resilience against evolving cyberthreats.
In this blog, we explore the fundamental principles of CPS 230, its inclusion of third-party risks as a critical component of operational resilience, and how it empowers business leaders to rethink their approach to governance.
CPS 230: Elevating Operational Resilience to a Strategic Imperative
Implemented on July 1, 2025, Operational Risk Management (CPS 230) is a comprehensive standard that replaces and consolidates previous standards:
- CPS 231 – Outsourcing was concerned with risk management and governance over outsourced resources.
- CPS 232 – Business Continuity Management focused on business continuity planning and disruption management.
- CPG 233 – Operational Risk Management involved operational risk frameworks.
The integration of these regulations into CPS 230 gives Australia’s financial organisations the opportunity to better manage operational risks and service provider oversight.
The following are CPS 230’s core prerequisites:
1. Maintaining Critical Operations During Disruptions
CPS 230 mandates that banks, insurers, superannuation trustees, and other financial institutions regulated by APRA identify “critical operations”, to which the disruption of these operations may significantly affect customers, the market, or the Australian economy.
To ensure that critical operations continue, financial services organisations need to design adaptive systems, conduct scenario testing, and embed their resilience plans into their daily operations — rather than wait for disasters to take place.
2. Managing Third-Party Risks
CPS 230 requires the financial organisations to take a close look at the entire supply chain, including third-party providers critical to its operations. This means meticulous due diligence before providers are onboarded to ensure they can meet resilience standards and keep services running even during disruptions. Similarly, financial organisations must outline providers’ responsibilities around operational risk and continuity.
Additionally, CSP 230 emphasises ongoing monitoring and regular testing of providers’ capabilities is essential and that should third- or fourth parties fail, plans must be in place to provide fallback options. These arrangements must be clearly defined, and oversight must start at the board level and continue through reporting to APRA.
3. Implementing Robust Business Continuity Planning
CPS 230 pushes beyond basic compliance by requiring financial organisations to embed business continuity into daily operations. This means dynamic plans that prepare for a wide range of disruptions, from cyber attacks to natural disasters and everything in between. CPS 230 doesn't just suggest these plans; it mandates financial organisations to continually refine them through stress tests and scenario exercises. The goal is to ensure critical functions recover quickly, minimising impact on customers and markets.
To comply, a leader in a financial organisation must foster a culture where resilience is strategic, with clear accountability and an ongoing commitment to improving response and recovery capabilities.
Embedding Resilience Through Automation
Modernising operations and adopting AI-driven tools are vital for today’s financial organisations — which is why resilience must be built into digital systems from the beginning. CPS 230 reinforces this by requiring APRA-regulated financial entities to proactively manage operational risks: not just through policy, but through intelligent systems and strong governance.
When used together strategically, automation and governance are essential components that help financial organisations detect threats early, maintain compliance, and ensure continuity across critical services.
Here’s how automation contributes to enhanced resilience:
Real-Time Risk Detection and Response
With the AI-enabled threat landscape, real-time detection is a top priority. In response, financial organisations increasingly turn to AI-powered platforms such as security information and event management (SIEM) and extended detection and response (XDR) to monitor vulnerabilities across hybrid environments. These tools enable faster risk identification and automated threat containment, helping financial organisations meet CPS 230’s expectations around timely response and continuity — especially in high-risk areas like payments and customer data access.
Streamlined Reporting and Audit Trails
CPS 230 prioritises transparency and accountability. Organisations can meet these expectations by automating the generation of audit-ready reports and maintaining logs of user activity, data access, and policy enforcement across collaboration environments. This reduces manual effort, improves accuracy, and ensures that governance processes are well-documented during regulatory reviews.
Integration with Continuous Compliance Workflows
To maintain alignment with CPS 230, compliance must be embedded into everyday operations. This includes automating policy enforcement for data classification, retention, and access controls across digital workspaces. By integrating these capabilities into existing collaboration platforms, financial organisations reduce risk exposure, simplify compliance, and support continuous improvement without disrupting productivity.
Secured Applications for Sustained Resilience
CPS 230 highlights the need to embed security within applications that support essential business functions. Automation makes this possible, particularly for collaboration and data-sharing tools. By automating the continuous monitoring and management of third-party access, financial organisations can lower risk exposure, ensuring uninterrupted customer services and continuous operations.
Ultimately, CPS 230 is a milestone regulation because it transforms these security measures from optional practices to mandatory regulatory requirements, embedding secure application management at the heart of operational resilience.
Embedding Resilience Through Governance
Governance serves as a strategic enabler for resilience by:
1. Moving Beyond Bureaucratic Controls to Agile Decision-Making
CPS 230 is a transformative regulation because it encourages financial organisations to rethink governance – not as a bureaucratic hurdle – but as a strategic tool for resilience. This entails a shift from rigid, reactive controls to agile and informed decision-making frameworks that empower teams to act quickly during disruptions.
When a financial organisation clearly defines data ownership among various teams and automates policy enforcement, they reduce the time spent on manual reviews and approvals.
Centralised oversight of collaboration platforms also helps prevent data sprawl and ensures sensitive information is accessible only to the right people. Aligning governance with business objectives empowers financial organisations to eliminate redundant processes, reduce compliance fatigue, and respond to emerging risks more quickly and clearly.
2. Aligning IT Governance with Business Priorities and Leadership
Aligning IT governance with business priorities is also essential. Fragmented systems and siloed decision-making lead to resource waste and compliance gaps. Various business units within financial organisations may use separate tools or workflows to manage access, compliance, and data, resulting in duplicated efforts such as multiple teams following inconsistent data retention policies. This creates compliance gaps, where sensitive data like transaction history or customer data may be improperly stored, accessed, or retained.
By unifying governance policies across collaboration platforms and aligning them with organisational goals, financial institutions can ensure resilience efforts are coordinated, measurable, and scalable.
Alongside other global regulations, CPS 230 is driving a paradigm shift. Forrester reports that 76% of business leaders now prioritise the transformation of their governance frameworks as part of their broader resilience approach. This indicates that strategic governance is more than control: It involves secure, compliant, and uninterrupted operations.
CPS 230 brings change by placing clear accountability on boards and senior management to oversee operational resilience. Governance at the leadership level is critical to embed a culture of resilience. More importantly, it ensures compliance is not just a matter of ticking items off a checklist but rather a continuous commitment.
Under CPS 230, key leadership responsibilities include:
- Defining and approving tolerance levels for critical disruptions.
- Overseeing the implementation and testing of business continuity plans.
- Ensuring resilience metrics are regularly reviewed and reported.
- Maintaining visibility over third-party risk and service provider arrangements.
Leading the Next Era of Financial Services
For Australian financial organisations, CPS 230 is a catalyst for transforming operational resilience from compliance to competitive advantage.
By mandating real-time risk detection, robust third-party oversight, and embedded business continuity planning, CPS 230 helps financial organisations to build resilience into their operational DNA from the start. The regulation's emphasis on automation and governance empowers organisations to respond swiftly to evolving cyberthreats while maintaining regulatory compliance and customer trust.
In this new regulatory landscape, Australia's financial services industry will need a unified, purpose-built platform that can secure daily operations and build resilience at scale. Organisations that build this foundation today will lead tomorrow's financial ecosystem with unmatched agility and customer trust.
