Q+A: What keeps the chair of APRA awake at night?

[upbeat music] Welcome to Fear and Greed Q&A, where we ask and answer questions about business, investing, economics, politics, and more. I'm Shaun Aylmer. Australia's financial system is enormous. APRA, the Australian Prudential Regulation Authority, supervises banks, insurers, and super funds holding more than $10 trillion on behalf of Australians, and the risks facing that system are changing quickly. Cyberattacks are becoming more sophisticated, artificial intelligence is creating new opportunities and new vulnerabilities, and geopolitical tensions are rising, adding to economic uncertainty. APRA has just released its 2026-27 corporate plan, setting out how the regulator intends to respond. John Lonsdale is the chair of APRA. John, welcome to Fear and Greed Q&A.

Shaun, it's great to be with you.

Only $10 trillion you're looking after, John. Do you sleep well at night? [laughs] I mean, that, that's a big gig.

Well, uh, there's a lot to worry about in APRA, and our core business is looking at the risks. So there's a set of risks that you know of and you try to, uh, you try to mitigate. Uh, but there's a- another set, which is the unknown set, which is something that you always worry about. Do we-- Have we got that covered? Uh, you know, have we asked enough questions? And I think the big thing that you always worry about in APRA is what if some of these risks manifest at the same time? And, um, you know this idea of can you imagine a world where you have a cyber event, uh, at the same time as you've got a geopolitical crisis, at the same time as you've got a slowing in the economic climate? So what does all that mean for the financial system? So we worry about all of that.

D- I mean, we'll get to some of those specifically in a moment, but broadly, as you look at the financial system today and in next year and the following year, et cetera, what is it that you are most worried about? Is it the fact that you can have a bunch of seemingly unrelated events happening at the same time? Or is it cyber? Is it AI?

Well, I think it's all of that, but the, you know, the horror scenario, I think, Shaun, would be if you have a crystallization of multiple risks at the same time, what we call a polycrisis. And that's why we're spending a lot of time, as we set out in the corporate plan, uh, looking at the links in the Australian financial system. We've done a platform piece of work on the cross-industry stress test. Uh, if there was a stress in the banking system, how would that feed through into superannuation and vice versa? Uh, we're spending a lot of time on crisis preparation. We're asking banks, insurers, and super funds to think about possible scenarios. We're asking them to do desktop scenarios, do some drills, and make sure they've got a plan when something goes wrong so that, you know, money can continue to flow, customers can continue to have the services that they're accustomed to. On geopolitical risk, we've put out a set of expectations. Uh, we've not done that before, Shaun, uh, but we're trying to make it very clear that there's a minimum here that banks, insurers, and super funds need to hit. And cyber and AI are big set of topic to make