RAST Action Programme for ICAAP

If your firm is within the scope of the CRD, regulations in force since January 2008 mean that you will have to calculate your capital adequacy in accordance with the Prudential Sourcebook for Banks, Building Societies and Investment Firms (BIPRU). Thus, in addition to the historic accounts- based capital  adequacy calculations, these rules now require firms to implement  an Internal Capital Adequacy Assessment Process (ICAAP)

An ICAAP has four key steps as follows:

• A Risk Survey to identify the risks your business faces.
• A Risk Assessment to establish the likelihood of those risks materialising and their potential impact on your firm.
• Stress Testing to model how well your business as a whole would survive this impact.
• A Capital Calculation to work out the amount of additional risk capital your firm needs to hold.

The FSA requires the whole process to be fully documented in an ICAAP report which your firm must review regularly and keep up to date.

We have devised a Risk Assessment and Stress Testing (RAST) Action Programme to take you and your management team through these crucial steps to the creation of a comprehensive ICAAP report. Our aim is to show you how to develop a robust process that senior management in your firm can use in the future and which will enable you to comply with these requirements.