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      Question

      The ICAAP is required to form an integral part of the

      management and decision-making culture of a bank. What does ICAAP stands for?
      A Indian Current Account Assessment Plan Correct Answer Incorrect Answer
      B Internal Capital Adequacy Assessment Process Correct Answer Incorrect Answer
      C International Capital Account Assessment Plan Correct Answer Incorrect Answer
      D International Currency Accounting Audit Principles Correct Answer Incorrect Answer
      E Internal Control Accounting & Audit Practices Correct Answer Incorrect Answer

      Solution

      Capital Adequacy was the principal message of the Basel II framework. Under ICAAP requirements a bank needs to have in place internal procedures and processes to ensure that it possesses adequate capital resources in the long term to cover all of its material risks. ICAAP document is required to clearly demarcate the quantifiable and qualitatively assessed risks. The ICAAP is also required to include stress tests and scenario analyses, to be conducted periodically, particularly in respect of the bank's material risk exposures, in order to evaluate the potential vulnerability of the bank to some unlikely but plausible events or movements in the market conditions that could have an adverse impact on the bank's capital.

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