A bank whose systems are not up to scratch will have to use the standard model. The RBA must sign off on the adequacy of internal systems. But the onus for effective day-to-day risk management will remain squarely with the boards and senior management of banks.
As an aside, during the past year we introduced arrangements under which a bank’s chief executive, with the endorsement of the board, must attest to the RBA that all key risks have been identified, that systems have been designed to manage those risks, that the descriptions of those systems held by the RBA are current and that the systems are working effectively.