Key activities
An ICAAP evaluates the amounts, types and distribution of capital that is required by a bank to cover the level and nature of the risks to which it is or might be exposed. It should be updated annually or in the event that significant changes to the bank’s business, risk profile or operating environment could make the current level of financial resources inadequate. Results must be documented in an appropriate format and submitted to the Prudential Regulation Authority (PRA). It should be updated at least annually or in the event that significant changes to the bank’s business, risk profile or operating environment could make the current level of financial resources inadequate.
To ensure that your ICAAP is in line with current regulatory guidance and industry best practices we’ve developed a comprehensive service model:
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An ICAAP evaluates the amounts, types and distribution of capital that is required by a bank to cover the level and nature of the risks to which it is or might be exposed. It should be updated annually or in the event that significant changes to the bank’s business, risk profile or operating environment could make the current level of financial resources inadequate. Results must be documented in an appropriate format and submitted to the PRA when requested.
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Review and analysis of your Pillar 2 capital requirement, which is not already covered under Pillar 1.
Stress testing based on your current position and projected three or five year business plan.
Macroeconomic scenario analysis based on the PRA's Bank Capital Stress Test (BCST) and PRA's scenario for banks not participating in BCST.
Analysis of the impact of management actions in each of the stress scenarios and evaluation of capital adequacy after management actions.
Capital planning evaluation under stress scenarios and identification of the Pillar 2B capital requirement.
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Preparation of the ICAAP document based on the inputs and the outcomes of the evaluations, together with the ICAAP related regulatory returns (FSA071 to FSA082). Present to the management team to gather feedback and agree amendments before moving into the Governance phase.
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The draft ICAAP document is showcased to the relevant management committee (e.g., Asset and Liability Committee) and Board Risk Committee. Feedback and comments are then absorbed into the final ICAAP document before being presented to your Board for the final level of governance and approval.
What we offer
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End to end solution
We work collaboratively with your senior team and boards, tailoring our approach to your business to develop a bespoke project plan for your ICAAP and the production of a document and regulatory returns.
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Elective services
You may just require support for specific tasks, such as scenario and risk evaluation workshops, stress testing, and training on industry guidance and best practices. Whatever support you need we’d be glad to be an extension of your team.
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Review & assurance
You may undertake the ICAAP without external consultancy support. In this event, we will be pleased to review the inputs and outputs of the process including the ICAAP document to provide assurance that you have followed regulatory guidance and industry best practice.
Ready for your ICAAP?
Why choose us
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Deep practical knowledge of the regulations and how to apply them proportionately for small and medium sized banks, ensuring you efficiently utilise capital and liquidity resources.
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We’ve undertaken a significant number of ICAAPs for our clients so keep abreast of the latest PRA guidelines and industry best practices.
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Effective project delivery with an efficient and high-quality engagement that saves you time and reduces the regulatory burden. This includes k-alm® our software as a service that includes robust, in-built stress testing models.
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What really defines our success is the strong, strategic partnerships we form with our clients. We listen carefully to their requirements to achieve positive results and make a lasting impact. Time and again clients comment on our responsiveness and the accessibility of our senior team.
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A professional and fit for purpose ICAAP document that has a a clear flow and structure. It assists with the management and mitigation of those risks and ensures adequate systems and controls are designed and implemented.
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Our clients are able to use the inputs and final ICAAP document on an ongoing basis as part of their wider risk-management practices.
What are we talking about
You might be interested in k-alm®
k-alm® is a risk management software-as-a-service solution that we’ve specifically designed to help small and medium-sized banks conduct stress tests, and evaluate Interest Rate Risk in the Banking Book (IRRBB), without the cost or complexity that is often associated with enterprise solutions.