Insights
Articles, guides and reference pages from RiskTAE's partners on UK prudential regulation, capital and liquidity, and hiring senior risk people.
The PRA buffer, also called Pillar 2B, is capital a bank or building society should hold on top of its Total Capital Requirement (Pillar 1 plus Pillar 2A) and its combined buffer, to absorb losses in a severe stress. The PRA sets it after the supervisory review, mainly from the firm’s stress test results net...
By Mark Dougherty · 9 min readA UK bank hiring a senior manager, a certification function holder or a notified non-executive director must request regulatory references covering the candidate’s previous six years from every relevant former employer, and must normally hold them before the PRA will approve a senior manager. PS12/26, in force since 24 April 2026, left the core rules...
By Benn Pople · 8 min readA skilled person review is a report the PRA requires under section 166 of FSMA from an independent expert, usually a professional services firm, on a matter it wants analysed, monitored or put right. The PRA’s policy is in its supervisory statement SS7/14. In 2025/26 it commissioned 14 reviews, all of banks and building societies...
By Mark Dougherty · 8 min readThe Business Indicator is the measure of size that sets a UK bank’s Pillar 1 operational risk capital from 1 January 2027. It is the sum of three components taken mainly from the income statement, each averaged over three years: interest, leases and dividends; services; and the financial component. The bank multiplies it by marginal...
By Mark Dougherty · 8 min readThe legal limit is three months from the day the regulator receives a complete application. In practice the PRA is much faster: its median time to decide senior manager applications was 28 days between December 2025 and February 2026, down from 62 days a year earlier, and 98% of SMF applications in that period were...
By Benn Pople · 7 min readPillar 2A is the firm-specific capital the PRA requires a bank or building society to hold on top of its Pillar 1 minimum, for risks Pillar 1 does not capture or does not capture fully, such as credit concentration and interest rate risk in the banking book. The PRA sets it after reviewing the firm’s...
By Mark Dougherty · 7 min readA chief risk officer runs a bank’s independent risk management function. In the UK the role is a regulated senior management function, SMF4, defined as “responsibility for overall management of the risk controls of a firm, including the setting and managing of its risk exposures”, with a direct reporting line to the board. The CRO...
By Benn Pople · 7 min readIn a UK bank the chair of the risk committee holds a senior management function of their own, SMF10, and needs regulatory approval before taking up the role. The PRA requires a risk committee, and so an SMF10, in firms it classes as significant; the chair must not perform any executive function, and the PRA...
By Benn Pople · 7 min readThe UK’s version of the Fundamental Review of the Trading Book (FRTB) arrives in two steps. From 1 January 2027 the new trading book boundary and the two new standardised approaches apply with the rest of Basel 3.1; the new internal model approach follows on 1 January 2028. In the year between, a firm with...
By Mark Dougherty · 7 min readThe ICAAP is a bank’s own assessment of whether it has enough capital for its risks; the ILAAP is its own assessment of whether it has enough liquidity and stable funding. They answer different questions under different parts of the PRA Rulebook, and the PRA reviews each in its own supervisory process and sets its...
By Mark Dougherty · 6 min readReference
Practitioner guides for UK bank boards on Basel 3.1 readiness, the SDDT regime, the ICAAP and hiring a chief risk officer, with checklists and sources.
02Free tools for UK bank boards and risk teams: an SDDT eligibility checker for the strong and simple regime and an SMF4 approval timeline planner.
03Dated PRA changes that affect a UK bank's risk function, with a link to the source for each, updated on the first working day of each month.
04Plain-English definitions of the terms UK risk leaders use, including ICAAP, Pillar 2A, SMF4 and the output floor, written by practitioners.
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