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4 - AAU - Accounting and Financial Auditing

AAU 315 - Internal Capital Adequacy Assessment Process (ICAAP)

Code Start Date Duration Venue
AAU 315 17 July 2023 5 Days Istanbul Registration Form Link
AAU 315 11 September 2023 5 Days Istanbul Registration Form Link
AAU 315 06 November 2023 5 Days Istanbul Registration Form Link
AAU 315 11 December 2023 5 Days Istanbul Registration Form Link
Please contact us for fees


Course Description

Banks face with the challenge of developing internal procedures and systems in order to ensure that they possess adequate capital resources in the long term with due attention to all material risks. In the international discussion, these procedures are referred to collectively as the ICAAP (Internal Capital Adequacy Assessment Process). However, ICAAP is not confined to capital calculation process; instead, ICAAP is a process comprises all of bank procedures and measures.

In developing its ICAAP, the bank is required to consider quantitative as well as qualitative criteria such as the establishment of suitable processes. Banks should be able to demonstrate that they have implemented the methods and systems necessary in order to ensure their capital adequacy.

The ICAAP thus constitutes a comprehensive package which delivers significant benefits from a business perspective through leveraging regulations not just show compliance with them. This training course intends to arm risk practitioners with a tool kit to go through the comprehensive ICAAP process covering all material risks their banks face along with the required tools & techniques to efficiently work with ICAAP components. 

Course Objectives

  • Giving brief information about the Basel Standards
  • Mastering the "ICAAP" conceptual framework along with its different applications
  • Developing participants' abilities to drill down ICAAP components
  • Providing participants with a practical tool kit with respect to ICAAP processes
  • Explaining latest banking industry approaches & regulatory trends with respect to ICAAP
  • Gaining knowledge on internal control roles played by different controlling units within a bank

Who Should Attend?

  • Managers especially Audit Committee members, CFOs, and CROs
  • Risk management managers and staff
  • Internal and External Auditors 
  • Basel Implementation Officers
  • Consultants

Course Details/Schedule

Day 1

  • Brief overview of Basel Standards
  • Three pillars of Basel Standards
  • Pillar 1: Credit Risk
  • Pillar 1: Market Risk
  • Pillar 1: Operational Risk
  • Pillar 2: ICAAP and SREP
  • Pillar 3: Disclosure
  • Minimum Capital Requirements
  • Components of Capital and Capital Buffers
  • Leverage Ratio
  • Liquidity Ratios

Day 2

  • Overview of Structure and Objectives of ICAAP
  • Principles of Pillar 2
  • Principle of Proportionality
  • Levels of Application within the Bank and the Banking Group
  • The ICAAP Risk Management Process
  • Risk Policy Principles and Risk Appetite
  • Risk Identification
  • Risk Monitoring and Risk Controls
  • Processes and Internal Control Mechanisms

Day 3

  • Defining Specific Assessment Procedures for All Material Risks
  • Pillar 1 and Pillar 2 Interaction and Residual Risk
  • Measurement Methods for Pillar 2 Risks – IRRBB
  • Measurement Methods for Pillar 2 Risks – Concentration Risk
  • Measurement Methods for Pillar 2 Risks – Strategic/Business Risk
  • Measurement Methods for Pillar 2 Risks – Reputation Risk
  • Measurement Methods for Pillar 2 Risks – Sovereign Risk
  • Measurement Methods for Pillar 2 Risks – Pension Obligation Risk

Day 4

  • Risk Aggregation at Bank level and at Group level
  • Components of capital under Basel III
  • Stress Testing
  • Internal Capital Requirement
  • Capital Planning
  • Liquidity Stress Testing
  • Liquidity and Funding Planning
  • ICAAP Validation and Internal Audit
  • Use Test of ICAAP
  • Critical Success Factors in ICAAP Implementation
  • Critical Roles and Responsibilities
  • Challenges in ICAAP Implementation

Day 5

  • Valuation Practices
  • Sound Compensation Practices
  • Supervisory Review Process (SREP)
  • Different Supervisory Approaches
  • Compliance to Risk Management Guidelines
  • Key points in ICAAP for Islamic financial institutions
  • Shariah Compliance
  • Rate of Return Risk for Islamic financial institutions
  • Reputation and Strategic Risk for Islamic financial institutions