Capital allocation

Principle

 The organisation's risk management framework is integrated with the capital modelling process and methodology, allowing management effectively to assess overall capital needs, enhance capital allocation and measure the return on risk. 
 
Minimum standards

Capital assessment is driven by the key business risks
Capital assessment is demonstrably driven by the key risks within the organisation's business plan and risk register, and is an integral part of the management of the organisation .
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Sound and appropriate capital assessment methodology
The organisation has a capital assessment methodology that is conceptually sound, appropriate to the organisation and realistically takes into account the organisation's risk profile and ability to manage risk.
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Key drivers of its capital requirements
The organisation understands the key drivers of its capital requirements, and seeks to ensure that the capital implications of business decisions are considered and understood.
View further guidance on key drivers of its capital requirements
Last updated on 04 May 2007