The Internal Capital Adequacy Assessment Process (ICAAP) is a new requirement where the financial institution needs to assess:

1. The adequacy of pillar 1 minimum capital requirements.
   

2. How much total shareholders funds is required in order to meet the firms strategy and ensure that the minimum capital requirements are not breached.
   

3. Ensure that all the material risks of the group are understood by the Board and there is appropriate and proportional risk management action being taken.
   

Pillar 2 requires risk to be presented and debated in an intuitive manner to the Board both in order to prove the use test and to ensure buy in and understanding by the Board.

Risk Advisors has advised many financial institutions on the design and implementation of the ICAAP in a way that is transparent to the Board and satisfies regulatory requirements.

Click here to download an article showing recent feedback on the ICAAPs