The Australian Prudential Regulation Authority (APRA) has a “legitimate interest” in monitoring financial institutions’ risky practices, Chairman Wayne Byres says.

He says APRA’s objective is to stop the financial sector suffering a crisis similar to the US in 2008 – a result of excessive risk-taking among big-name institutions.

“Assessing risk culture is no easy task,” he told the House of Representatives Standing Committee on Economics on Friday. “But if an organisation has a poor attitude to risk-taking and risk management, it can ultimately threaten an institution’s financial viability.

“It is important to note that prudential and conduct regulators… both have a legitimate interest in the culture within financial institutions.

“APRA’s focus on risk culture reflects our prudential mandate – that as a result of undesirable behaviours and attitudes towards risk-taking and risk management, the viability of an APRA-regulated institution itself… might be threatened.”

The regulator will soon publish an information paper on the topic.