29. The DGS should calculate the ARW for an individual member institution based on a set of risk …

The DGS should calculate the ARW for an individual member institution based on a set of risk indicators from each of the following five risk categories:

• a. Capital: indicators should reflect the level of loss-absorbing capacity of the member institution.
• b. Liquidity and funding: indicators should measure the member institution’s ability to meet its short- and long-term obligations as they come due without adversely affecting its financial condition.
• c. Asset quality: indicators should measure the extent to which the member institution is likely to experience credit losses.
• d. Business model and management: indicators should measure the risk stemming from the member institution’s current business model and strategic plans, the quality of the member institution’s internal governance and in ternal controls.
• e. Potential losses for the DGS: indicators should reflect the potential losses for the DGS stemming from a DGS intervention, which the DGS is unlikely to recover.

Core risk indicators

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

• EBA - Published by the European Banking Authority at https://www.eba.europa.eu/