However, he has not responded to calls for the sacking of Police Minister Carl Scully over claims by the opposition he mislead parliament by trying to cover up the report's findings.
A review by retired assistant police commissioner Norm Hazard found the risk assessment police carried out in the lead-up to the violence on December 11 at Cronulla Beach was inadequate and flawed.
It makes 33 recommendations including a change in the racial descriptors used by police and the development of an investigation plan to follow major public order operations.
"The command structure and facilities to assist the commanders during the day were inadequate," the report said.
"The review concluded that the risk assessment to indicate the necessary level of response was flawed.
"Subsequently, the planning for the event was not adequate and some specialist resources that could have assisted in the management of the operation were not deployed."
The review found that there is evidence of racism and bias in the Cronulla community, but that there is also evidence of a significant level of violent criminality committed by an element of the Middle Eastern community.
Mr Hazzard found there were racially-based incidents taking place in the Cronulla beach area prior to the riot, although not at the level perceived by some in the community.
His investigations found text messages transmitted via mobile phones promoted the racially-motivated riot.
Mr Hazzard also criticised the media, with particular reference to talk-back radio.
"During the six days leading up to the Cronulla riot the media interest in anticipation of public disorder had a continual presence in the Cronulla area," his report said.
"Talk-back radio had the emerging disorder an important topic on their programs."
The report said the riot sent a clear message to the Australian community that its multicultural society had entered a new phase.
It said authorities need to keep pace with the emerging threat of civil disorder.
Mr Hazzard said police responding to the riot and subsequent reprisal attacks played a commendable role, but he made a total of 33 recommendations.
These included that state police continue to use racial descriptors for offenders, and that a review of the policy on the wearing of riot equipment should be conducted.