Internal Capital Adequacy Assessment process (ICAAP) and Supervisory Review and Evaluation Process (SREP) are two important concepts which forms part of Pillar 2 assessment undertaken by firms under the Basel framework. Under ICAAP, a firm needs to assess the extent of funds required to meet a firm’s strategy and maintain minimum regulatory capital requirements.

In addition SREP outlines the regulatory expectations from firms required to undertake ICAAP in accordance with the requirements set out in various regulatory texts. It also provides guidelines on how the supervisors would subsequently undertake the review and evaluation process and set out the Individual Capital Guidance and the Capital Planning Buffer.

CPMoksha has assisted numerous banks and financial institutions in terms of capital assessment and review of ICAAP and decoding SREP for their benefit. Our services cover the most crucial ICAAP elements:
• Risk assessment - Identification and measurement of the risks the firm is exposed to
• Risk mitigation techniques for systematic reduction in the risk exposure and lower capital requirements
• Forward Capital planning which assess the capital impact by internal and external adverse scenarios i.e. business strategy, stress and scenario analyses
• Defining the role and engagement of firm’s board of directors and management highlighting the extent of their responsibility, accountability, and involvement
• Drafting and review of ICAAP document for regulatory submissions which incorporates firm’s Risk governance, appetite, and strategy, articulating risk appetite and reconciling capital planning and strategic planning