Australia’s prudential regulator will test how banks, superannuation funds and insurers would cope with a severe disruption caused by artificial intelligence as AI becomes increasingly embedded across the financial system.
APRA said its 2027 System Stress Test will examine scenarios including rapid AI adoption disrupting business models and a sharp fall in the value of AI-related assets.
The regulator is also assessing risks created by financial institutions using AI internally, including its role in customer decisions, risk management and critical operations.
Another concern is concentration.
If multiple banks, insurers or super funds rely on the same AI models, cloud infrastructure or technology providers, a failure at one shared supplier could spread quickly across the system.
AI can also increase the speed and sophistication of cyberattacks and fraud.
APRA’s latest system-risk work follows its inaugural stress test, which found participating banks and superannuation funds were resilient to the market and liquidity shocks examined.
The next phase will focus more heavily on technology-driven disruption.
For Australia’s financial sector, the message is that AI is increasingly being treated not simply as a productivity tool, but as a potential source of system-wide financial risk.
