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ICAAP: Checklist & Pointers

Some key pointers from the FCA for firms undertaking and reviewing their ICAAP

The below outlines what some of the key items that should be considered and assessed within a Firm’s ICAAP.

ICAAP Checklist & Pointers

19th January 2017

The FCA issued a Dear CEO letter to IFPRU firms in the Autumn which provided some key items the regulator expected to see within a firm’s ICAAP, particularly with regard to the regulator’s review during their Supervisory Review and Evaluation Process (SREP).

Whilst written to IFPRU firms, the details on this checklist will be of use to all firms required to maintain an ICAAP.

ICAAP checklist:

The ICAAP document should be a stand-alone document;

It should detail the strategies, processes and systems in place to manage risk at the firm. In addition it must be demonstrated, considered and justified within the document that these measures are both comprehensive and proportionate to the nature, scale and complexity of the firm’s activities;

The risk management tools and governance arrangements should be detailed, including the firm’s overall risk appetite and tolerance along with any metrics that are used to monitor risk appetite;

An assessment of the amounts, types and distribution of financial resources, own funds and internal capital that the firm considers to be adequate to cover the nature and level of risks to which the firm is (or might be) exposed.

Firms should include the identification of major sources of risk to their ability to meet their liabilities as they fall due, while also demonstrating their compliance with all of the parts applicable to them within BIPRU 12;

Stress Tests & Scenario analysis (that have been undertaken in accordance with SYSC 20 and where appropriate the General Stress Testing & Scenario Testing Rule in IFPRU 2.2.36R) should also be included.

A breakdown of the Pillar 1 own funds requirement calculation would also be useful to include.

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If your firm would like information on our ICAAP support services such as assistance in examining your ICAAP to ensure it is appropriately assessed for your current business plan and activities or assistance in documenting this review, please contact us. Our experienced ICAAP Consultants would be happy to help, so send an enquiry or telephone today.

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