Final Countdown: Why Mid-Sized Financial Institutions Must Act Now on APRA CPS 230

This article is essential reading for executives and leaders in risk, operations, and technology at mid-sized Australian financial institutions. With less than a month until APRA CPS 230 comes into force, the time to act is now. This piece highlights the compliance urgency and offers practical guidance to transform the regulatory obligation into a competitive advantage through assessment, prioritisation, and partnership.

Key Findings

• CPS 230 introduces a major uplift in operational risk, continuity, and third-party risk standards

• Deadline of 1 July 2025 leaves institutions with days—not months—to demonstrate readiness

• Mid-sized firms face systemic challenges due to fragmented functions and legacy systems

• Strategic partnerships can provide the scale and expertise needed to accelerate implementation

Recommendations

1. Immediately conduct a focused CPS 230 compliance health check

2. Develop and activate a tactical remediation and uplift plan

3. Leverage experienced partners to fast-track workstreams and fill capability gaps

4. Integrate CPS 230 with existing enterprise risk and operational frameworks

5. Establish a cross-functional governance model to oversee ongoing compliance

Analysis

The Regulatory Shift: CPS 230 Explained

CPS 230, the new Prudential Standard on Operational Risk Management, marks a substantial reform by the Australian Prudential Regulation Authority (APRA). Taking effect from 1 July 2025, the standard replaces three prior standards—CPS 231 (Outsourcing), CPS 232 (Business Continuity), and parts of CPS 220 (Risk Management). What makes CPS 230 different is its integrated approach to operational risk, business continuity, and third-party risk. Institutions must now: - Identify and map critical operations - Define and test tolerances for disruption - Conduct regular business continuity simulations - Actively monitor third-party risk exposures This is a significant uplift from passive compliance to proactive and tested resilience. While Tier 1 banks have long embraced this level of rigour, mid-sized institutions now face a compressed timeline to meet these expectations.

1. Time Has Almost Run Out

There are less than 30 days left before CPS 230 becomes enforceable. For many mid-sized institutions, this means: - Initial assessments may still be underway or incomplete - Third-party contracts may not yet be updated - Critical operations may be loosely defined - Board-level visibility may be limited The urgency is clear: without demonstrable progress and a credible plan for full compliance, institutions may risk regulatory scrutiny, reputational damage, or financial penalties.

2. Mid-Sized Institutions Are Disproportionately Exposed

Mid-sized financial institutions operate with leaner teams, older tech, and smaller change budgets. These constraints introduce unique vulnerabilities: - Legacy systems complicate real-time monitoring and mapping - Manual processes make resilience testing slow and error-prone - Limited procurement power restricts vendor oversight - Fewer risk specialists limits the ability to interpret and implement the standard CPS 230 doesn’t scale down for size. Expectations on governance, documentation, testing, and board-level reporting apply equally.

3. Fragmentation of Risk, Technology and Operations

One of the key challenges uncovered during industry self-assessments is the siloed nature of operations: - Risk teams manage controls and registers - IT manages infrastructure and system outages - Business teams own continuity plans - Procurement holds vendor contracts CPS 230 mandates a joined-up view across these functions.

4. Strategic Partnerships Are No Longer Optional

Trying to meet CPS 230 obligations entirely in-house, this late in the cycle, is a high-risk strategy. Strategic partners can help by: - Providing ready-to-deploy frameworks - Supplying regulatory insight - Deploying experienced teams to accelerate reviews - Enabling tooling that improves visibility and traceability Partners also bring an outside-in perspective to identify minimum compliance and best practice.

Conclusion

CPS 230 is not just another checkbox exercise. It reflects APRA’s increasing focus on operational resilience, third-party risk, and board accountability. For mid-sized financial institutions, the time to act is now. With the July 2025 deadline nearly here, leadership teams must shift from planning to execution mode. By partnering with experienced advisors and aligning risk, technology and business operations, institutions can meet compliance obligations and unlock longer-term efficiency, resilience, and customer trust.

How Sedha Consulting Can Help

Sedha Consulting is uniquely positioned to support mid-sized financial institutions on their CPS 230 journey. Our team brings together specialists in operational risk, compliance transformation, continuity planning, and third-party risk management, backed by delivery experience across Australia’s regulated sectors. We help clients: - Conduct rapid CPS 230 readiness assessments - Develop risk-aligned remediation plans - Review and uplift third-party contracts and SLAs - Implement integrated risk and continuity frameworks - Engage boards and executive teams through targeted reporting Whether you need a focused uplift in one area or end-to-end program support, Sedha can deliver with speed, accuracy, and regulatory confidence. Visit www.sedhaconsulting.com to learn more or reach out to our CPS 230 delivery team for a confidential discussion.