Regulatory Alerts2016-11-17
Guidance Note On Internal Capital Adequacy Assessment Process
The Central Bank of Kenya's guidance note on the Internal Capital Adequacy Assessment Process (ICAAP) aims to ensure banks have adequate capital to support their risks. Banks must develop an ICAAP document outlining their capital levels, strategies, and risk profiles. The ICAAP should be formalized, comprehensive, and subject to internal review and approval. It should also consider the interactions between risks and include stress testing for a minimum of three years. The Board and senior management are responsible for ensuring adequate capital, establishing capital planning policies, and reviewing the ICAAP. The ICAAP report should enable the Central Bank to assess the bank's capital planning process, risk exposure, and total internal capital.