Some financial institutions may face additional capital requirements after the prudential regulator said many show the same weak risk-assessment capabilities it found last year at Commonwealth Bank.
The Australian Prudential Regulation Authority said boards should expect "increased supervisory scrutiny" after it found their self-assessment procedures surrounding non-financial risk were not up to scratch.
APRA had asked boards to gauge whether weaknesses uncovered by its inquiry into CBA also existed in their own companies.
CBA was ordered to hold an extra $1 billion in regulatory capital reserves after an inquiry prompted by the lender's money-laundering scandal found profits had blinded Australia's largest bank to threats in its business.
APRA deputy chair John Lonsdale said on Wednesday that many failings within CBA were replicated elsewhere as the financial industry grapples to manage risks such as culture and accountability.
"It was also interesting to observe the generally positive assessments boards and senior leadership teams had of their own performance, even when they had identified serious weaknesses in their institutions," Mr Lonsdale said.
"It was not always evident that institutions clearly understood the drivers of their findings."
Mr Lonsdale said that meant any planned action to address weaknesses may not be effective or long lasting.
"Boards should expect increased supervisory scrutiny of their institutions as they implement remediation actions," he said.
"Also, in a number of cases, the weaknesses identified in the self-assessment were sufficiently material that APRA is considering stronger supervisory responses, including the application of an operational risk capital overlay."
After two days of exuberant gains, financial stocks were among the worst performing on the ASX following APRA's announcement.
Shares in three of the big four banks were down by more than 0.5 per cent, while AMP - one of the most prominent institutions at last year royal commission into misconduct in financial services - was 2.6 per cent lower at 1200 AEST.
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