A government review warned that Australia’s pensions regulator must better identify emerging systemic risks in the A$3.5 trillion ($2.4 trillion) industry, including how funds value their growing holdings of unlisted assets.

The Australian Prudential Regulation Authority, one of two regulators of the nation’s so-called superannuation system, had previously put funds on notice over their valuations of private assets. However, a review by the Financial Regulator Assessment Authority released Thursday found it needs to be doing more.

“APRA should direct greater attention to proactively identifying and comprehensively understanding risks,” the review said. Along with valuation practices, the FRAA said the conversion of unlisted or illiquid assets to cash was a key concern, along with “increasingly complex investment strategies.”

The funds are facing increased regulatory scrutiny after ramping up their holdings of unlisted assets both locally and abroad in recent years. In the past week, some of the biggest players told Bloomberg they’ve seen writedowns in their property portfolios, but brushed off concerns that the losses were materially impacting members’ returns.

The FRAA said a range of stakeholders participated in the review, noting that some “observed that an increased examination of unlisted assets and associated valuation practices was also required. Participants perceived APRA’s work in this area may have been delayed and deprioritised.”

The review made a total of five recommendations, including improving data and technology capabilities. “The recommendations provide helpful guidance and reinforcement for a more effective APRA into the future,” APRA Chair John Lonsdale said in a statement.