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Welcome to our self-paced eLearning course on the Internal Capital Adequacy Review Assessment (ICARA) process for Investment Firms. The ICARA Process requirement is deriving from the provisions of the new prudential package (Investment Firms Regulation and Directive) introduced by the European Commission. The aim of this course is to provide a comprehensive understanding of the ICARA process methodologies and requirements, as well as its implications for Investment Firms operating within the European Union.

While taking and upon completion of this course, students will:

  • Comprehend the shift from the previous prudential regime to the new Investment Firms Regulation and Directive (IFR/IFD) and the rationale behind the introduction of the ICARA process.
  • Gain a comprehensive understanding of the methodologies and requirements of the ICARA process, including its scope, key components of documentation, and levels of application.
  • Analyze the implications of the ICARA process for investment firms operating within the European Union, including its impact on capital and liquidity adequacy assessment, risk management, and governance arrangements.
  • Compare and contrast the ICAAP and ICARA processes, identifying the key differences and the reasons behind the transition.
  • Apply the K Factors approach to determine capital requirements, focusing on Risk-to-Client (RtC), Risk-to-Market (RtM), and Risk-to-Firm (RtF), and understand how it tailors regulatory requirements to the specific operations of investment firms.
  • Evaluate the role of internal control frameworks and governance arrangements in the ICARA process, understanding their importance in ensuring compliance and effective risk management.
  • Demonstrate the ability to practically implement basic and additional capital and liquidity requirements calculation methodologies within the ICARA process.
  • Design stress tests for incorporation within the ICARA process and understand the steps taken by regulators during the Supervisory Review and Evaluation Process (SREP).
  • Analyze the importance of proactive dialogue between investment firms and regulatory authorities facilitated by the ICARA process, identifying its role in identifying and managing inadequacies or weaknesses in internal control frameworks.
  • Strengthen their risk management practices by effectively implementing the principles and methodologies of the ICARA process, ensuring compliance with prudential regulatory requirements.

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