Implementing new ILAAP Handbook

SUMMARY

The client wished to perform an enhanced gap-analysis of the organisation’s current ILAAP framework against the ECB and EBA guidelines as well as to use this information to design and implement an ILAAP Handbook/Framework document covering all in-scope entities. The final deliverable also included a detailed remediation roadmap, which helped the client and its entities to remediate and align their ILAAP processes across the Group in line with the regulatory and supervisory requirements.

CUSTOMER GOAL

The project required a custom approach executed by a team of experts in the liquidity area to deliver the following three objectives:

1. Design and develop a new ILAAP Handbook, which incorporates the ECB and other applicable ILAAP requirements, outlining the ILAAP governance, its architecture and interlinkage between all ILAAP-related documents;
2. Conduct an enhanced gap-analysis between the current ILAAP framework and the latest regulatory requirements (i.e. ECB, EBA, etc.);
3. Build a remediation plan for closing any gaps and findings discovered as part of the second objective.

CHALLENGES

The project involved three separate entities and two separate businesses across two different countries. In order to develop a common standard for the ILAAP across the Group, the team had to manage and overcome the following challenges:

• Account for differences in the regulatory environments across the jurisdictions;
• Include the specificities of each business model;
• Manage differences of opinion on what is applicable to which entity;
• Coordination of teams working exclusively remotely.

SOLUTION

Avantage Reply approached the problem in a structured manner by allocating the tasks and teams according to their core skills. Each team was assigned to a specific business model in order to execute the objectives mentioned above. Both teams were participating in weekly meetings with each client and among themselves to ensure the high quality and consistency of the deliverables. In the end, each team delivered the following:

• An excel-based gap-analysis of the current ILAAP framework against the EBA, ECB, CSSF and BaFin ILAAP-relevant regulatory requirements;
• A Board presentation presenting the summary of the gaps along with the proposed remediation plans for each finding (incl. the resource requirements, estimated timeline, quick wins, teams involvement and the estimated impact on the processes/policies);
• A common ILAAP Handbook which provides a template for the development of the ILAAP report for each entity, while outlining the key processes, information and sections that are required by the regulators.