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ICAAP and ICARA Support Services

Under IFPR, all in-scope investment firms will be required to create an ICARA. This replaces the ICAAP for some and is a new undertaking for many. We offer support with the ICARA process.

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    ICAAP and ICARA Support Services


    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:

    • demonstrate an understanding of the risks to their profit making abilities
    • look ahead to evaluate how plausible scenarios could affect their ability to maintain sufficient capital and liquidity resources
    • outline the systems and controls in place to identify, monitor and mitigate harms.
    • capital and liquidity should be assessed where these are not adequately mitigated through systems and controls. Are additional capital and liquidity resources required?
    • consider the risks caused by the whole business – including non-MIFD activities.

    Recovery Action Planning

    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.

    Wheelhouse Services 

    Wheelhouse Advisors’ ICAAP and ICARA experts assist clients in developing, implementing and documenting robust processes, including:

    • Assistance with developing and/or documenting a risk management framework, including:
      • Risk appetite, identification, and assessment
      • Mapping to effective policies and procedures
    • Robust monitoring, reporting and escalation protocols
    • Orderly wind-down planning
    • Production of financial and regulatory capital forecasts
    • Pillar 2A assessment quantifying additional risks not fully covered under Pillar 1
    • Pillar 2B assessment – stress and scenario testing
    • Production of a final report

    Michael Chambers

    Head of Prudential

    Get in touch

    Email us info@wheelhouse-advisors.com
    Call us on +44 (0)20 3404 0440

    Why Wheelhouse?

    We support your business in the way that suits your requirements best. We will work with you to scope a project and relationship based on your needs, not the other way around. We will provide you with access to prudential expertise that will help you identify, assess and document major sources of change driven by the IFPR and manage them going forward. Our consultants advise you on how to best prepare for the new Investment Firm Prudential Regime and assist with the ongoing obligations that result from it.

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