Lifting the game on ICAAP and unlocking business value by making money do more

In today’s volatile and fast-moving risk environment, accurate and agile assessment of capital and risk requirements under the Basel Committee on Banking Supervision’s Internal Capital Adequacy Assessment Process (ICAAP) is fundamental to banks’ economic stability and competitiveness.

But banks face significant challenges in holistic balance sheet management while complying with ICAAP due to the volume and complexity of Basel regulations, fragmentation of risk assessment across credit, market and operational risk, and tension between capital requirements and capital buffers.

The ICAAP should enable the board to make judgements about – and to set – the bank’s business model, financial forecasts, risk appetite statement, possible management actions, capital requirements (for base case conditions) and capital buffer (for possible adverse stress scenarios).

This guide illustrates how FIS’s Balance Sheet Manager solution can drive operational efficiencies in relation to a bank’s ICAAP efforts, in order to protect shareholder value, expand the balance sheet and make money work harder to drive sustainable growth.

The guide covers practical steps aligned to the key building blocks of ICAAP: the business model and operating environment, material risk assessment, risk appetite statement, capital planning and budgeting, and enterprise-wide stress testing, as well as a section on recovery and resolution as a natural extension of the process.