11
Management actions
11.1
Where the benefit of prospective management actions are incorporated in a firm’s capital assessment, firms should understand the financial effect and any preconditions that might affect the value of management actions as risk mitigants. In addition, firms should be able to justify the choice and realism of prospective management actions and the assumptions used. A firm should be able to show the financial impact of a management action.
- 20/11/2015
11.2
A firm should be able to identify any realistic management actions intended to maintain or restore its capital adequacy in a stress scenario and estimate the effects of the stress scenario with and without such management actions.
- 20/11/2015
11.3
A firm may consider scenarios in which expected future profits will provide capital reserves against future risks. However, it would only be appropriate to take into account profits that can be foreseen with a reasonable degree of certainty as arising before the risk against which they are being held could possibly arise.
- 20/11/2015
11.4
Where pension obligation risk is considered, a firm should assess any risks that may increase its current funding obligations towards the pension scheme and that might lead to the firm not being able to pay its other liabilities as they fall due.
- 20/11/2015
11.5
A firm is expected to determine where the scope of any stress test impacts upon its pension obligation risk and estimate how the relevant measure of pension obligation risk will change in the scenario in question.
- 20/11/2015