Evaluation of the IRAP and ICAAP
10. The SREP evaluation of the IRAP and, where applicable, the ICAAP covers all activities of an Authorised Person and takes all relevant data collected during the supervisory process into account. The SREP evaluation process will use desk based reviews, firm visits and meetings to arrive at a final view.
11. As part of the SREP, the Regulator will consider:
a. the completeness of the IRAP and, where applicable, the ICAAP by ensuring that it covers all business areas, internal governance and all risk categories of the Authorised Person;
b. the soundness and quality of the IRAP and, where applicable, the ICAAP process in relation to the firm's size, business complexity and risk profile;
c. soundness of qualitative calibration and quantitative methodology whenever employed by the firm;
d. execution of the IRAP and, where applicable, the ICAAP in terms of consistency, quality and documentation;
e. adequacy of internal controls and quality assurance processes on the IRAP and, where applicable, the ICAAP; and
f. adequacy of management information and whether the management had responded adequately and in a timely manner to such information.
12. Based on the SREP, the Regulator will form an assessment which will be communicated to the Authorised Person and flow into the overall supervisory approach. The action required resulting from the IRAP and ICAAP will be communicated to the firm as part of a risk mitigation programme.
13. In relation to an Authorised Person in Category 1, 2, 3A or 5, where the Regulator does not agree with the results of the firm's ICAAP results, the Regulator will involve the firm in a dialogue to reconcile any difference in view to arrive at a consensus estimate of the capital level required to address all risks identified either by the firm or by the Regulator in its SREP. Such an estimate will be specified by the Regulator as the Individual Capital Requirement for the firm. Where consensus is not possible the Regulator may impose an Individual Capital Requirement on a firm.