The Five Pillars of a Strong Capital Policy

DCG's John Demeritt unpacks the key components that help make a capital policy durable across business cycles, exam cycles, and leadership transitions.

A strong and effective capital policy accomplishes three things at once: it anchors the Board’s expectations for capital adequacy, it gives management a practical playbook for managing capital in good times and bad, and it provides regulators with an understanding of the institution’s philosophy on capital.

The best policies are more than just a list of regulatory ratios. They connect risk, governance, and strategy to clear triggers with potential response actions.

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The Five Pillars of a Strong Capital Policy

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