2. Objective
Effective from Jan 01 2024 - Jan 30 2009
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The main purpose of the ICAAP is for the Bank's senior managers to proactively make a strategic assessment of its capital requirements considering its strategies, business plans, all risks, acquisitions, dividend policies. Further, the ICAAP also establishes the capital required for economic, regulatory and accounting purposes and helps identify planned sources of capital to meet these objectives. Also, an ICAAP benefits include greater corporate governance and improved risk assessment in banks, and thereby increases the stability of the financial system. It also help to maintain regulatory capital levels in accordance with its strategy, economic capital, risk profile, governance structures and internal risk management systems.
Another important purpose of the ICAAP document is for senior management to inform the Board of Directors and subsequently SAMA on the ongoing assessment of the bank's risk profile, risk appetite, strategic plan and capital adequacy. It also includes the documentation as to how the bank intends to manage these risks, and how much current and future capital is necessary for its future plan.