Industry-focused Compliance - Governance, Risk, and Compliance Topic for Oracle Applications - page 389

Core Systems Staging Area Processing Area Results Area

Dashboards

Customer

Retail Enterprise

Performance
Management

Ledger

Performance
results Store Instrument

Corporate

Extract
transform
And
load

Dimensions

Trading and Securities

Data Quality

Enterprise Risk
Management

Wealth Management

Data Quality Data Quality

Risk Results
Stone

Analytics

Financial Reconciliation

OLAP
Cube

Comply with pillar one—Capital adequacy
Oracle Reveleus embeds a process called Internal Capital Adequacy Assessment
Process ( ICAAP ), which models a firm's internal assessment of capital that it
considers adequate to cover all material risks to which it is exposed.

The objective of ICAAP is to ensure that a bank understands its risk profile and has
systems in place to assess, quantify, and monitor risks. While regulatory capital is the
capital that the regulator requires a bank to maintain, economic capital is the capital
that a bank needs to maintain and is in general, estimated using internal risk models.

Theoretically, a bank could suffer losses causing a complete erosion of its asset value.
It is reasonable to look at the erosion, which would almost never happen. We need to
consider losses so big that there is a very high probability that they will never occur
and then see what would be the erosion in equity in that scenario(s). This forms the
basis of economic capital measurement. The following Reveleus UI shows some good
examples of scenarios that have been considered during a stress testing exercise: