Risk and ICAAP benchmarking survey 2015

Risk and ICAAP benchmarking survey 2015

Could investment firms’ actions today be storing up problems for tomorrow? Our 2015 Internal Capital Adequacy Assessment Process (ICAAP) benchmarking survey reveals how omissions or errors in the fine detail of Financial Conduct Authority (FCA) submissions could have substantial knock-on effects. In some cases, firms could be compelled to hold up to double the capital than they had calculated, a finding that could impact dividend payouts and impact a firm’s ability to grow.

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RISK AND ICAAP BENCHMARKING SURVEY 2015

Key highlights:

  • This report analyses the survey responses and ICAAP documents from 32 investment management firms
  • If the FCA disallows both a firm’s insurance mitigation and diversification benefits firms could be forced to hold double the amount of capital than they originally calculated. Across all prudential categories, the average additional capital is £30m and for larger firms, this can be as much as £54m
  • To meet higher capital requirements, firms could be forced to dip into retained profits and their dividend pool
  • The ICAAP is rising on board agendas. The report reveals an improvement in senior engagement, with over 50 per cent of boards and senior management spending over 10 hours on the process, compared with just over a third of firms last year
  • Firms could be missing out on a huge market opportunity in front of them. The pensions freedoms, change in demographics and the long-term savings drive, are driving more money towards investment managers. Firms seeking to take advantage of this growth need to be able to be able to invest in product innovation, distribution and technology. Getting a punitive capital add-on from the regulator would restrict this.

A copy of the 2016 report can be found here.

Risk and ICAAP benchmarking survey 2016

Risk and ICAAP benchmarking survey 2016

Our 2016 benchmarking survey, 'Continuing the journey', shows that investment firms’ risk management and ICAAP practices need improvement

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