Australian Prudential Regulation Authority (APRA) Chairman Wayne Byres has warned companies will be given less leeway as it takes a more demanding approach.

“We certainly hope to still have an open and co-operative relationship with regulated entities, since that is essential to good prudential supervision, but will have little patience when that is not reciprocated,” he told a Risk Management Association Australia dinner in Sydney last week.

“Be it governance and culture, financial stability, superannuation or cyber-related risks, our standards and expectations in the future are likely to be more prescriptive and demanding and our enforcement of them will undoubtedly be firmer and more insistent.”

Mr Byres says APRA has a much larger role compared to five years ago and areas once seen as peripheral are now a key part of its mandate.

Cyber security, previously on the risk radar, has also become more important as attacks increase in scale and sophistication, testing the ability of regulators to respond.

He says APRA will need new skills, additional resources, stronger partnerships and potentially new powers as “critical functions and data move outside the regulatory perimeter”.

“We are now in a world where APRA’s traditional modus operandi will be inadequate,” Mr Byres said. “The current regulatory framework is not designed for clouds, ecosystems and partnership models.”

The regulator in recent years has become more active in seeking to improve governance, culture and accountability in the sectors it regulates.

Mr Byres says climate change is also a focus following the Paris Agreement and there is now a view that boards should be aware of the climate risks to which their business is exposed.

An APRA survey undertaken last year across Australian banks and insurers had climate change as the most commonly cited long-term financial risk, ahead of economic downturns and cyber security.

“We are working with our colleagues on the Council of Financial Regulators to ensure we, and the industries we regulate, have an appropriate awareness of the risks and how they are being managed,” he said.

Mr Byres says the regulatory pendulum tends to swing between periods of significant change and times when there are demands to pare back, but overall expectations of APRA have grown and pushed it into new areas.

“There is no sign that tide is going to turn soon,” he said.