Document ID: chunk:federal_register_of_legislation:F2024L01518:body:0:p4
Version: federal_register_of_legislation:F2024L01518
Segment Type: other
Provision Reference: 
Character Range: 9261–12309

the ADI's risk appetite and Regulatory Capital requirements. This includes plans for how target levels of capital are to be met and the means available for sourcing additional capital where required;
         3.           actions and procedures for monitoring the ADI's compliance with its regulatory capital requirements and capital targets. This includes the setting of triggers to alert management to, and specified actions to avert and rectify, potential breaches of these requirements;
         4.           stress testing and scenario analysis relating to potential risk exposures and available capital resources;
         5.           processes for reporting on the ICAAP and its outcomes to the Board and senior management of the ADI, and for ensuring that the ICAAP is taken into account in making business decisions;
         6.            policies to address the capital impact of material risks not covered by explicit regulatory capital requirements; and
         7.           an ICAAP summary statement as defined in paragraph 18 of this Prudential Standard.
 5.          The ICAAP summary statement is a high-level document that describes and summarises the capital assessment and management processes of the ADI. It must address the aspects of the ICAAP listed in paragraphs 17(a) to 17(f) of this Prudential Standard, and also include:
         1.           a statement of the objectives of the ICAAP, the expected level of financial soundness associated with the capital targets and the time horizon over which the ICAAP applies;
         2.           a description of the key assumptions and methodologies utilised by the ADI in its ICAAP, including stress testing and scenario analysis;
         3.           triggers for reviewing the ICAAP in light of changes to business operations, regulatory, economic and financial market conditions, group structure and other factors affecting the ADI's risk profile and capital resources;
         4.           a summary of the ADI's policy for reviewing its ICAAP, including who is responsible for the review, details of the frequency and scope of the review, and mechanisms for reporting on the review and its outcomes to the Board and senior management;
         5.           a description of the basis of measurement of capital used in the ICAAP, and an explanation of the differences where this basis differs from that used for regulatory capital; and
         6.            references to supporting documentation and analysis as relevant.
 6.          An ADI must ensure that its ICAAP is subject to regular and robust review by appropriately qualified persons who are operationally independent of the conduct of capital management. The frequency and scope of the review must be appropriate to the ADI, having regard to its size, business mix, complexity of its operations and group structure, and the nature and extent of any changes that have occurred or are likely to occur in its business profile or its risk appetite. A review must be conducted at least every three years. The