ICAAP

Overview

Internal Capital Adequacy Assessment Process Approach

A bank must implement Internal Capital Adequacy Assessment Process (ICAAP) in accordance with second Basel accord. ICAAP ensures that bank meets capital requirements for Pillar 2 risks such as Strategic, Compliance, Regulatory & Legal risk along with Credit, Market and Operational Risks. ICAAP consists of internal processes and systems which ensures bank stays solvent in long term covering all of its material risks. Additional to determination of economic capital consisting of pillar 1 and pillar 2 capital requirements, ICAAP also includes stress tests on various scenarios that could materialise as prominent risk for bank in stressed economic conditions.

ICAAP must be an integral part of the bank’s processes and must be embedded within the organization.

Senior management and the Board of Directors (BOD) must be supportive and fully engaged in the process. Development tools are not sufficient to establish a sound ICAAP framework. Experts at Auronova will help you understand the nature of risk and simplify the implementation of your ICAAP framework.

  • Efficient stress testing program with an early warning system
  • Bank’s vision for the management of capital
  • Bank’s policies, procedures and strategies for the management of all types of risk
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