ICAAP, Pillar III & Capital Adequacy reporting
The Internal Capital Adequacy Assessment Process (ICAAP) is an overall valuation of the risks a financial institution faces, how they intend to mitigate those risks and how much current and future capital is needed having considered other mitigating factors.
In Cyprus, the ICAAP is a requirement of every CIF and is evaluated by CySEC using their Supervisory Review and Evaluation Process (SREP). The onus is therefore on the institution to demonstrate that its ICAAP is comprehensive and adequate to the nature of risks posed by the firm’s specific business activities and operating environment.
The implementation of an ICAAP is not rooted exclusively in supervisory considerations; rather it should be in the interest of all stakeholders to ensure a viable risk position with emphasis on the importance of capital management. In particular, it is important to detect developments which may endanger the financial institution as early as possible in order to enable suitable countermeasures. For larger or more complex institutions, this may mean developing an appropriately detailed and rigorous stress and scenario testing framework.
In addition to the ICAAP, the Capital Requirements Directive (CRD IV) brings in a new EU-wide supervisory framework for Common Reporting (CoRep). Financial institutions are therefore subject to ongoing capital adequacy requirements, such as monitoring and assessing their capital adequacy on a continuing basis as well as preparing and submitting their capital adequacy reports.
What can FAI Comply do for your business?
Identify and assess all material risks of the firm, and implement controls to mitigate such risks
Identify the amount and quality of internal capital in relation to risk profile, strategies and business plan, and create a proposal for capital allocation
Preparation and design of ICAAP, including implementation and documentation, in line with the nature, scale and complexity of the firm’s activities
ICAAP follow-up through supervisory review and evaluation process of CySEC
Advise in relation to CRD IV
Preparation of CRD IV CoRep Forms (i.e. capital adequacy reports)
Preparation of Pillar III Disclosures
Provision of ICAAP, CRD IV and other regulatory requirements training to relevant employees and senior management
In today’s financial services industry nothing could be more important to the success and continuation of the business than to ensure that firms stay on the right side of their relevant regulations.
Risk management services
In the financial world, the ever-evolving set of regulations following the recent financial crises have highlighted the critical importance of having highly defined risk management controls.
Insider trading, collusion, terrorist financing and money laundering, among other things, means that compliance and anti-money laundering (AML) carry considerable risk.
Due diligence & investigations
Our team of experts at FAI Comply is able to assist your company in this changing landscape and offer high-quality advice on a broad range of regulatory issues. We seek to understand your business and provide you with practical and cost-effective solutions, through our responsive and flexible approach.
Internal audit services
An effective internal audit requires a diversity of skills that many companies find difficult to source and retain. Increasingly companies are leveraging the benefits of outsourcing to support their corporate governance and risk management requirements.
ICAAP & Capital Adequacy reporting
The "Internal Capital Adequacy Assessment Process” (ICAAP) is an overall valuation of the risks a financial institution faces, how they intend to mitigate those risks and how much current and future capital is needed having considered other mitigating factors.