The centrepiece of the FCA's drive to develop firms' financial resilience, the ICARA process (which replaced the ICAAP regime for relevant investment firms), has been in place for over a year.
It culminates in the submission of a questionnaire, completed at least annually, with the date originally selected by each firm back in November 2021. The opportunity to move that submission date is coming to an end, and going forward the mandatory requirement is that periods between ICARA questionnaire submissions cannot be less than twelve months.
With the first ICARA questionnaire cycle now complete, firms should take the opportunity to reflect and revise that self-imposed deadline date based on year-one experience.
What should you consider when deciding whether to change that vital date? It is key to take a full overview of the regulatory and operational wallchart. Financial year-ends, tax year-ends, ICARA submissions, and all other reporting obligations are essential, so prioritising and planning are paramount.
Compartmentalising and embedding processes are effective ways to reduce the ICARA critical path. As Mike Chambers, Head of Prudential at Centralis, notes:
"Firms which experience the most seamless ICARA processes are those which have integrated the component parts with business-as-usual activities. Firms need not wait for the annual ICARA process review to officially start before executing key aspects of it. One example is that the risk framework should be operated throughout the business year to ensure divisions remain abreast of how their activities affect the firm's potential to cause harm and the resulting impact on capital and liquidity. Another is that financial planning and scenario testing can be undertaken alongside the annual budgeting process, which dovetails with the 'going concern' review from auditors. If these and other component parts are owned and delivered in the ordinary course, the annual ICARA review can be streamlined, thereby reducing disruption to the business."
Decision time
It is time to carefully reconsider one of the most disruptive regulatory deadlines and take advantage of the seldom-afforded permission to move it.
The Prudential team at Centralis GRC can advise on the best approach for firms based on the range of factors at play, and assist in integrating ICARA processes to maximise efficiency and minimise disruption of the required annual review.
If you would like to discuss your options, please contact Head of Prudential, Michael Chambers, at michael.chambers@centralisgroup.co.uk.