Industry Best Practice Series: Internal Capital and Liquidity Adequacy Assessment Process ICLAAP
- Moneta Training
- Sep 24, 2020
- 2 min read
Updated: Jan 28, 2021
VIRTUAL WORKSHOPS
Course overview
From this workshop participants will gain insight from a recent Prudential Supervisor into what is considered critical success factors that banks should address when developing their ICLAAP approach.
By providing industry leading practice, knowledge and awareness of the ICLAAP framework, delegates will learn what firms should consider in order to meet the Basel III prudential regulatory requirements using case studies and simulations. Attending this 2-day workshop will develop delegates’ understanding of these concepts and gain insights on balancing regulatory requirements with financial performance and profitability objectives.
The course is reflective of the regulatory enhancements arising from the global financial crisis. These enhancements have led to more rigorous banking regulations covering capital and liquidity in the form of the Base III Accord. Basel III establishes a more robust approach for identifying and assessing the amount of capital and liquidity resources that must be held, which are based on the size and composition of the balance sheet and the embedded financial risks therein.
Basel III’s more formal framework encompasses a ‘Pillar 1’ capital and liquidity minimum financial resource requirement, and importantly, a ‘Pillar 2’ regime that requires banks to undertake a firm-specific assessment of key balance sheet exposures for credit, market, operational, and liquidity risks, and determine the amount of capital and liquidity resources necessary to cover unexpected losses. This Pillar 2 framework is the Individual Capital and Liquidity Adequacy Assessment Process, or ICLAAP.
The ICLAAP informs the bank of how much regulatory financial resources are needed given its specific balance sheet risk profile. Moreover, it is the key instrument for informing the regulator where and how financial risk manifests in the balance sheet and why the amount of capital and liquidity the bank holds is enough to cover those risks.
Learning outcomes
To gain an enhanced understanding of the Basel III capital and liquidity requirements
To explain the impact of the regulation on a bank’s balance sheet and understand how increases in the quantity and quality of capital and liquidity required impact financial performance
To gain insights on the regulatory expectations of the ICLAAP – its purpose, rationale, and function
To acquire regulatory-focused insights on capital and liquidity stress testing:
why it is important, and
what stress testing needs to tell you about the relationship between Pillar 1 and
Pillar 2 requirements
To become familiar with the differences between an ICAAP and ILAAP
To gain an operational understanding of, and insights into the SREP and its relationship to the ICAAP, ILAAP, and ICLAAP
To become familiar with what makes an effective ICLAAP
To gain insights on operationalising the ICLAAP – how to engage with its regulatory requirements and actively embed these in the business
Who should attend
Those new to regulatory capital and liquidity management
CROs and other risk professionals seeking greater awareness and insights into Basel III prudential regulatory requirements
Internal Audit staff responsible for prudential risk governance and management oversight
Regulatory Compliance staff
1st line risk managers looking to increase their awareness of regulatory financial resource requirements and their impact on the business
Please contact us for more information.
