Internal Capital Adequacy Assessment Process (ICAAP)

The ICAAP is the comprehensive process and accompanying strategy, that credit institutions use to ensure that the amount, composition and distribution of (internal) capital that they deem to be adequate, in order to ensure that all significant risks arising from banking transactions and banking operations to which they are exposed are covered. The ICAAP is intended to be checked on a regular basis, in order to ensure that it is comprehensive in its nature, and is proportional to the nature, scope and complexity of the activities conducted by the credit institution (see principle of proportionality). The senior management of the credit institution itself is responsible for establishing the ICAAP. It is based on an adequate risk management, which ensures by means of suitable processes and procedures, that the risks to which the credit institution is exposed, are identified, measured, reported and controlled.