Michael Chambers
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At the core of the Investment Firms’ Prudential Regime is the Internal Capital Adequacy and Risk Assessment, or ICARA process. This builds on the formulaic requirements set by the regime on capital and liquidity.
The ICARA process replaces the ICAAP for some firms and encompasses aspects of internal governance with a particular focus on risk management systems, processes and controls and a thorough assessment of financial resources.
It should be the centrepiece of a continuous risk management process.
Business Model Assessment, Planning and Forecasting.
Firms should be able to forecast capital and liquidity needs, both on an ongoing basis and in the event of winding-down and:
Centralis Governance Risk & Compliance services
Centralis ICARA experts assist clients in developing, implementing and documenting robust processes, including:
The FCA wants to see evidence that firms have early warning indicators and triggers, with plans in place to restore capital or liquid resources should thresholds be at risk of breach.
Firms should also include comprehensive wind down plans with triggers, timelines and scenarios where different resources might be needed.
The ICARA process is detailed and can be complex. As the central part of the whole regime, it’s worth spending time and effort to get the underlying processes right.