Prudential & Risk

Experience and expertise in all aspects of Prudential requirements and Risk Management.

We can advise on capital and liquidity adequacy rules, regulatory reporting, and drafting key regulatory documentation.

ICAAPs, ICARAs & ILAAPs

Why Insight?

  • Insight have strong experience of project managing, co-ordinating and drafting ICAAPs/ICARAs, ILAAPs, Recovery Plans and Wind Down Plans;

  • Insight has worked with institutions in the UK and EU, and agreed individual capital guidance with regulators – including success in reducing the Pillar 2 add-ons.

Areas of expertise

  • Risk identification process – this forms the foundation for the ICAAP/ICARA/ILAAP which then drives the rest of the process including stress testing;

  • Identify the material risks and determine whether additional capital or liquid assets are required including a review to ensure the correct Pillar 1 requirements have been applied;

  • Defining and agreeing assessment; •

  • Pillar 2A and 2B quantification and development of stress testing;

  • Review and challenge of assumptions by senior management;

  • Appropriate documentation of assumptions and review;

  • Drafting communications with regulators; and

  • SREP preparation and training.

Wind Down Plans

Why Insight?

  • Experience of managing, co-ordinating and drafting Recovery Plans across different EU jurisdictions;

  • Regulators have found Insight plans comprehensive and meeting BRRD requirements with no material deficiencies, and fully integrated into the risk management framework of the firm.

Areas of expertise

  • Recovery Plans are based on the work done in the ICAAP and ILAAP;

  • Insight will work with the client to develop all aspects of the Plan:

    • Recovery Scenarios: the Plan must set out the detailed idiosyncratic, market-wide stresses that would impact the bank’s business such that it comes close to breaching its minimum capital and liquidity ratios;

    • Recovery Indicators: How does the bank monitor the key ratios and what other metrics are monitored? How is the plan integrated into the bank’s existing risk management framework and ICAAP and ILAAP? E.g. early warning indicators both internal and external;

    • Recovery Plan implementation and governance – how will the Plan be activated? Who is then involved in implementing the Plan?;

    • Recovery Options: Summary and detail of each option; what is the capital and/or liquidity impact of each option?; timing and feasibility of each option; how will each option be executed and who is responsible?; and

    • Communications plan: with both internal and external stakeholders.

Capital and Liquidity Advisory

Why Insight?

  • Insight have deep knowledge and experience of capital and liquidity requirements.

Areas of expertise

  • Strong in-house knowledge and experience of advising business units and control functions on CRD and CRR requirements;

  • Reviewing current Pillar 1 requirements – Regulatory Reporting and RWA optimisation;

  • Getting Regulatory Reporting Right (GRRR) - we can help UK and EU banks and investment firms put in place a robust governance process around capital and liquidity reporting, Pillar 1 calculations and interpretation;

  • Conducting impact analyses of new requirements including:

    • Brexit–legal entity analysis, options assessment and relocation/authorisation issues;

    • Fundamental Review of the Trading Book (and wider CRDV/CRR2 requirements); and

    • FCA Investment Firms Prudential Regime (IFPR) analysis and implementation;

  • Drafting Business Requirements Documents for regulatory implementation projects;

  • Managing implementation of new regulatory requirements including CRD v/CRR2 and IFPR/IFR/IFD: and

  • Expert witness services in regulatory disciplinary proceedings.

Regulatory Reporting

Why Insight?

  • Experience of dealing with regulators both in the UK and the US gives Insight an excellent understanding of regulatory expectations of what the risk framework should be including the expected governance and oversight of the Compliance function.

  • Real world knowledge of building, implementing and managing compliance risk • frameworks.

Areas of expertise

  • Establishment and/or review of a firms compliance risk framework including, regulatory change management, monitoring and testing, compliance risk assessments, governance and escalation;

  • Formulation and review of a firm’s compliance function strategy which should set out what a compliance function is trying to achieve over a 2 to 5 year period i.e. the long term strategy of the compliance function which should be reviewed and approved at senior executive levels;

  • A review of a firms compliance mandate to ensure it is suitable for the nature and scope of the firm and that it is over and above the absolute minimum of ensuring “regulatory compliance”. The mandate should ensure the effectiveness of the risk and control environment and ensuring independent challenge;

  • The review and enhancement of the annual compliance plan. Ensuring that main risks are identified and reflected accordingly including the frequency and sample sizes of testing and their rationale. Ensuring accuracy, completeness and that the plans are fit for purpose. Plans should be appropriate and justifiable for the scale and nature of the businesses and risks that they are intended to cover; and

  • Talent assessment: Firms are required to have appropriate resource in place which includes not just the number of compliance officers retained by a firm but that the skills and expertise. With the extensive management experience, specifically with regard to compliance functions, Insight can ensure that firms have identified any gaps that they may have and that a plan is in place to address them in order to achieve an effective compliance function.

Wind Down Plans

Why Insight?

Insight has experience of managing, co-ordinating and drafting wind-down plans that meet the regulatory requirements.

Areas of expertise

  • Insight will help clients develop a step-by-step plan based on the relevant FCA handbook and PRA requirements, taking into account market practices where handbook is not sufficiently prescriptive. This will include:

  • Identification of scenarios that lead to a firm no longer being viable, governance processes, management information monitoring and other control processes to support timely wind-down decision making;

  • Plan to steer the firm to wind-down its business in an orderly manner after a decision to exit the business has been made;

  • Assessment of necessary resources, both financial and non-financial, to support an orderly wind-down; and

  • Proactively identifying and mitigating any material or obstacles to orderly wind-down.

Risk Frameworks and Policies

Why Insight?

The Insight team have deep experience of establishing effective governance frameworks and drafting risk policies and procedures for Market, Credit, Liquidity and Operational risks.

Areas of expertise

  • Risk Assessment Frameworks – producing comprehensive documentation to evidence risk policies, processes, controls, systems and procedures including consideration of legal entity and or group:

    • risk capacity;

    • risk appetite;

    • risk limits; and

    • risk profile;

  • Risk Appetite Statement – helping to produce the documentation that sets out the levels and types of risk the bank/firm is willing to accept to achieve its business objectives; and key background information and assumptions that informed the risk appetite statement in line with the strategic and business plans;

  • Risk Governance – helping to establish an affective governance structure and roles and responsibilities for different committees and senior managers; and

  • Drafting and managing policies and procedures for:

    • Market risk;

    • Credit risk;

    • Liquidity risk and

    • Operational risk.