Frequently Asked Questions
This is an enterprise-grade Basel III/IV compliance platform that combines capital adequacy, liquidity assessment, and credit risk rating into a single, integrated solution. It automates the full spectrum of regulatory requirements — from calculating Risk-Weighted Assets (RWA) and capital ratios (CET1, Tier 1, Total Capital) to measuring liquidity coverage (LCR, NSFR), running stress tests, and generating board-ready ICAAP/ILAAP reports.
It’s designed for banks, development finance institutions (DFIs), and financial institutions of all sizes that need to comply with Basel III/IV standards. The platform is used by over 150 financial institutions across 40+ countries. Whether you’re a small regional bank or a global institution, the solution scales to meet your needs.
Not at all. While the platform is built with actuarial-grade precision and was developed by quantitative advisors to the IASB and BCBS, it’s designed to be used by a wide range of professionals.
Finance and reporting teams use it to generate regulatory submissions and board reports. Risk managers use it for stress testing and capital planning. Even external auditors appreciate the platform’s transparency and full validation artifacts. The platform handles the complex math behind the scenes — RWA calculations, PD/LGD/EAD modeling, value-at-risk simulations, and liquidity projections — so you can focus on the results, not the calculations.
Basel III is the comprehensive set of reforms developed by the Basel Committee on Banking Supervision (BCBS) in response to the 2008 financial crisis, introducing higher capital requirements, new liquidity standards, and a leverage ratio.
The “finalised Basel III reforms” — informally known as Basel IV — were published in December 2017 and are being phased in from 2023 through 2028. Key changes include a revised credit risk standardised approach, the output floor (72.5% of standardised RWA), the Fundamental Review of the Trading Book (FRTB), and the Standardised Measurement Approach (SMA) for operational risk.
Our platform supports both Basel III and Basel IV requirements simultaneously, so you’re compliant today and ready for what’s coming.
Under Basel III, there are three key capital ratios:
- CET1 Ratio(Common Equity Tier 1 / Total RWA): Minimum 4.5% plus buffers. This is the highest-quality capital — common shares, retained earnings, and other comprehensive income.
- Tier 1 Ratio(CET1 + AT1 / Total RWA): Minimum 6% plus buffers. This adds Additional Tier 1 instruments like perpetual preference shares and AT1 bonds.
- Total Capital Ratio(Tier 1 + Tier 2 / Total RWA): Minimum 8% plus buffers. This adds Tier 2 instruments like subordinated debt and general provisions.
The platform automatically applies all capital buffers — the capital conservation buffer (2.5%), countercyclical buffer (0–2.5%, jurisdiction-specific), and any G-SIB or D-SIB surcharges set by national regulators. It calculates these ratios daily, monthly, or quarterly and generates supervisory submission files in the format required by your central bank.
Risk-Weighted Assets (RWA) are the denominator for all capital ratios and represent the total risk exposure of a bank’s assets. Total RWA comprises three risk types:
- Credit Risk RWA: The largest component for most banks. The platform supports both the Standardised Approach (SA) and the Internal Ratings-Based (IRB) approach.
- Market Risk RWA: Calculated using Value-at-Risk (VaR), Stressed VaR, and the Fundamental Review of the Trading Book (FRTB) framework.
- Operational Risk RWA: Supported through the Basic Indicator Approach (BIA), Standardised Approach (SA), Advanced Measurement Approach (AMA), and the new Standardised Measurement Approach (SMA).
The platform calculates RWA using both standardised and advanced approaches, giving you flexibility based on your regulatory approval and data maturity.
Credit risk rating is the process of assessing the creditworthiness of a borrower or counterparty. It’s a foundational input for calculating Probability of Default (PD), Loss Given Default (LGD), and Exposure at Default (EAD) — which in turn feed into RWA calculations and Expected Credit Loss (ECL) models under IFRS 9.
Our solution includes audit-ready credit risk rating software with Basel II FIRB (Foundation Internal Ratings-Based) scorecard PD simulation, specifically designed for emerging markets. It helps you:
- Assign and validate credit risk ratings/grades
- Assess Significant Increase in Credit Risk (SICR) triggers
- Model PD, LGD, and EAD for regulatory capital and provisioning
This is all integrated with the broader Basel Analytics platform, so your credit risk ratings flow directly into RWA and capital adequacy calculations.
ICAAP (Internal Capital Adequacy Assessment Process) is the bank’s own assessment of its capital adequacy, covering both Pillar 1 (minimum regulatory capital) and Pillar 2 (additional capital needed for risks not fully captured under Pillar 1).
ILAAP (Internal Liquidity Adequacy Assessment Process) is the bank’s assessment of its liquidity adequacy, covering LCR, NSFR, and funding plans under stress scenarios.
Both are mandatory supervisory requirements. Our platform automates the entire ICAAP and ILAAP process — from risk quantification and stress testing to generating export-ready reports for your board and regulator. The platform has achieved over 50 ICAAP sign-offs from supervisors.
The platform includes comprehensive liquidity risk coverage:
- LCR(Liquidity Coverage Ratio): Ensures banks have enough high-quality liquid assets to survive a 30-day stressed funding scenario.
- NSFR(Net Stable Funding Ratio): Ensures banks maintain a stable funding profile in relation to their assets and off-balance sheet activities.
The platform automates LCR and NSFR calculations, cash flow projections, and funding concentration analysis. It also supports ILAAP modeling with stress scenarios and funding profiles.
The platform comes with a 14-day implementation guarantee for standard deployments. This is a dramatic improvement compared to the 12–24 months typically required with legacy vendors like SAS or Finastra.
The platform is cloud-native and designed for rapid deployment, with pre-configured templates and methodology defaults aligned with regulatory expectations from day one. Each deployment ships with jurisdiction-specific templates for regulators including CBUAE, SBP, SAMA, CBK, NRB, CBB, QCB, BoT, RBF, PRA, and OSFI.
The platform is built for auditability from the ground up. It has achieved 200+ Big 4 audit approvals (KPMG, PwC, Deloitte, EY) with a 100% approval rate. The models and methodologies are aligned with Basel Committee on Banking Supervision (BCBS) frameworks and validated by external auditors.
Every calculation — from RWA and capital ratios to stress test scenarios and liquidity metrics — is fully documented and traceable. The platform generates export-ready ICAAP/ILAAP reports for board and regulator submission. If you’re ever questioned by supervisors or auditors, you have full visibility into every step of the calculation.