An Actuarial Practice Guide to The Internal Capital Adequacy Assessment Process (ICAAP)

The fundamental question that the Internal Capital Adequacy Assessment Process or ICAAP seeks to address is: “Will the board be able to distribute its forecasted dividend payout to ordinary shareholders, whilst meeting its regulatory constraints (across capital, liquidity, funding and leverage)?” In order to address this question, the bank must assess the Institutions:
• Business model and operating environment
• Material risk profile
• Risk Appetite statement
• Capital planning and forecasting
• Enterprise-Wide Stress Testing (EWST); and
• Management action (risk mitigation plan)

to provide a sufficient level of assurance to The Board that the Institution’s reputation will be preserved in-light of the forward-looking market disclosure.

Speaker: Steven Claxton
Moderated by: Michael Tichareva