The ILAAP evidence checklist: what supervisors actually ask for

How a submission is judged#

An ILAAP is assessed less on its conclusions than on its evidence. Reviewers rarely dispute that a bank believes its liquidity is adequate; what they test is whether the document shows how that belief was formed, who challenged it, what would change it, and whether the same reasoning drives actual decisions between reporting dates.

The checklist below sets out the ten areas where submissions are most consistently probed, what a reviewer is looking for in each, and the pattern that marks a weak submission — which is almost never an absent section, but a present section that asserts rather than evidences.

Governance and board ownership#

A reviewer looks for evidence that the board understands and owns the liquidity adequacy conclusion rather than receiving it. That means:

• approved terms of reference setting out decision rights across the board, the asset and liability committee, treasury, risk and finance
• minutes in which the ILAAP and its key assumptions were genuinely discussed, with recorded questions and management responses
• a documented approval of the liquidity risk appetite and of the ILAAP itself, with dates
• evidence that the board was told what the framework does not cover

A weak submission carries a governance chapter describing an organisation chart and a committee calendar, with minutes recording only that the document was noted and approved — the tell being that no question, objection or requested change appears anywhere in the record.

Material liquidity risk identification#

A reviewer looks for a documented process that starts from the balance sheet and the business model rather than from a standard risk taxonomy, and that explains why each risk was judged material or immaterial. Strong submissions show:

• the assessment criteria
• the risks considered and rejected with reasons
• coverage of funding concentration, refinancing, foreign-currency, intraday, off-balance-sheet and contingent exposures
• a clear statement of which material risks are quantified, which are managed qualitatively, and why

A weak submission reproduces a generic risk list with no rejected candidates, no link to the bank's own funding structure, and no explanation of how materiality was determined — leaving the reviewer to conclude that the taxonomy was inherited rather than derived.

Behavioural assumption evidence and validation#

This is the area most often decisive, because behavioural assumptions determine the answer more than any other input. A reviewer looks for:

• the data behind deposit segmentation
• the observed history supporting stickiness and attrition rates
• non-maturity deposit treatment with its empirical basis
• rollover and credit-line drawdown assumptions
• evidence of independent validation
• sensitivity analysis showing how conclusions move when key assumptions are flexed
• a stated set of model limitations

Critically, the reviewer will ask whether assumptions calibrated on benign history remain appropriate under stress, and expects to see that question addressed explicitly.

A weak submission presents run-off rates as settled parameters with no derivation, no validation trail, no sensitivity analysis, and no acknowledgement that the historical window contains no stress event.

Stress-testing scenario design and severity justification#

A reviewer looks for scenarios built from the bank's own vulnerabilities rather than borrowed wholesale, covering idiosyncratic, market-wide and combined stress, with a documented rationale for the severity chosen and evidence that severity was tested rather than assumed. Strong submissions show:

• the narrative behind each scenario
• the mapping from narrative to parameters
• the interaction between liquidity, credit and market stress
• a reverse stress test identifying the combination that would render the position unsustainable

A weak submission runs three scenarios labelled mild, moderate and severe with no explanation of why the severe case is severe, no reverse test, and outflow rates that turn out to be the standardised regulatory assumptions with a modest uplift.

Survival horizon calculation and buffer composition#

A reviewer looks for a transparent cash-flow ladder under stress, cumulative gap analysis, and a survival horizon whose calculation can be reproduced from the stated assumptions — together with an honest treatment of the buffer that supports it. That means:

• high-quality liquid assets broken down by type, currency and legal entity
• encumbrance disclosed
• monetisation capacity stated net of realistic haircuts and settlement timing
• any operational or cross-border constraint on moving liquidity to where it is needed

Strong submissions show the survival horizon before and after management actions and explain the difference. A weak submission reports a single survival horizon figure with no ladder behind it, an undifferentiated buffer total, and monetisation assumed to be immediate and unhaircut.

Funding plan and concentration analysis#

A reviewer looks for a forward funding plan that is consistent with the business plan and the stress results, and for concentration analysis granular enough to be actionable. Evidence includes:

• the projected funding mix over the planning horizon
• the maturity profile and identified refinancing clusters
• market-access assumptions with a stated basis
• dependence on the largest depositors, counterparties, products, channels and intermediaries
• an explanation of what the bank would do if a planned funding source became unavailable

Strong submissions reconcile the funding plan to the stress scenarios, showing that planned issuance is not assumed to proceed in conditions where the stress test says the market is closed. A weak submission presents a funding plan that grows the balance sheet on wholesale terms that the same document's stress scenario has already declared unavailable.

Early warning indicators and thresholds#

A reviewer looks for a limited set of indicators covering outflow, spread and market access, concentration, collateral and buffer, foreign-currency and counterparty signals, each with a documented threshold basis, a named owner, an escalation level and a defined response.

The reviewer will ask where the thresholds came from and expects an answer referencing the bank's own distribution and stress results rather than regulatory minimums, and will look for evidence of back-testing after any episode of funding pressure.

A weak submission lists an extensive indicator dashboard with thresholds set at or near regulatory floors, no ownership recorded, and a history of breaches that were reported and noted but produced no action or recalibration.

Contingency funding plan executability and testing#

A reviewer looks for a plan that answers who does what, when, and with which realistically available funding — not a description of options. Evidence includes:

• defined stress stages with triggers aligned to the early warning framework
• named crisis decision rights and deputies
• each contingency source quantified with its realistic capacity
• the operational steps and lead time required to access it
• a sequencing of management actions
• communication protocols for depositors, counterparties, staff and supervisors
• records of testing or simulation with the lessons acted upon

The decisive test is whether several actions quietly rely on the same underlying liquidity or on market access that the stress scenario removes.

A weak submission is a plan listing sources at their theoretical capacity, with no lead times, no owners, no evidence of any test, and a total contingency capacity that exceeds what the same document's severe scenario implies is available.

Independent challenge and internal audit coverage#

A reviewer looks for evidence that somebody outside the team that produced the numbers examined them and was in a position to disagree. That means:

• a risk function review with recorded findings and their resolution
• independent validation of behavioural models and stress assumptions
• an internal audit opinion covering the ILAAP process with scope, findings, ratings and remediation status
• documentation of any point on which risk and treasury reached different conclusions and how that was settled

A weak submission asserts that the framework is subject to independent challenge without producing a single instance of it — no finding, no disagreement, no change made as a result — which reviewers read as an absence of challenge rather than an absence of problems.

Management information and traceability from analysis to decision#

A reviewer looks for a line that can be followed from a stress result or an indicator breach through the reporting pack to a recorded decision and its implementation. Evidence includes:

• the liquidity dashboard actually used by the asset and liability committee, its frequency and its escalation triggers
• minutes showing stress results discussed and decisions taken
• examples of limits or assumptions changed as a consequence of analysis
• a documented data lineage for the key figures with any known quality limitations stated

The unifying question behind the whole checklist is whether the ILAAP is a live management framework or an annual document, and traceability is where that question is answered.

A weak submission produces a polished report whose figures cannot be reconciled to the committee packs, whose conclusions have never changed a limit or an assumption, and whose evidence of use consists of the approval of the document itself.