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Case Studies

Case Study

ICAAP/ILAAP – Gap Analysis and Roadmap

FOCUS ON: Case studies,

THE CLIENT

The client is the subsidiary of the largest private bank providing wealth management and investment banking services. It is a less significant institution subject to supervision from the local supervisor, the ACPR.

THE CHALLENGE

Noting the increasing implication of the local supervisor on ICAAP and ILAAP, the client requested Avantage Reply to perform a gap analysis of its existing set-up in light of supervisory expectations and market practices. Ultimately, the client sought clear recommendations to implement formal ICAAP and ILAAP processes, among other to pre-empt an anticipated increase in supervisory scrutiny.

APPROACH AND SOLUTION

Through a short timeframe, the work has been conducted in two phases: (i) an analysis of the existing setup with gap analysis; and (ii) establish a set of recommendations and the design of a roadmap.

To start, the team conducted a stocktaking exercise through a series of workshops and a review of documents (incl. the internal control report, risk report, recovery plan, etc.) to form an opinion on where the Bank stood compared to market practices. Then, the target state was defined through a combination of supervisory expectations (both local and European) and benchmarking on best practices. The identified gaps included: (i) the Material Risk Identification process, (ii) the risk appetite framework, (iii) the stress testing, and (iv) the embeddedness in the financial and liquidity planning processes of the bank.

RESULTS AND BENEFITS

In a short timeframe, the team delivers a report setting out its findings and associated recommendations. Those were translated into an action plan with timeline and allocation of tasks. Results of the analysis were presented to the Chief Risk Officer, and to the Deputy Chief Executive Officer.

 

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The customer is a retail belgian bank focusing on mortgage loans and consumer credit. Following the implementation of the IFRS 9 ECL calculator, the need arised to implement a control framework to ensure timely and quality calculation and bookings, and integration in the accounting and reporting platforms. Avantage Reply helped the client bridge the distance between different departments to identify the right responsibilities at the right moment in the process to increase its reliability.

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