Capital coverage and management decisions
A 15-minute applied lesson for ORSA, capital and finance learners.
What you will learn
Calculate capital coverage, distinguish changes in available and required capital, and identify the questions needed for a credible management decision.
A worked example
Capital coverage = available capital ÷ required capital × 100. With available capital of 12 million and required capital of 10 million, coverage is 120%. If available capital falls to 9 million while the requirement rises to 11 million, coverage falls to 81.8%. An eligible capital increase of 4 million raises coverage to 118.2%, assuming no other changes.
Explore the arithmetic
Enter both amounts in the same currency and units.
Illustrative arithmetic. This exercise does not calculate regulatory capital. Institution-specific assessments require the applicable capital basis, eligibility rules, deductions and jurisdictional thresholds.
Questions for management
What caused the loss of capital? What increased the requirement? Is the proposed capital action feasible within the assumed period? Does liquidity deteriorate sooner? What approvals, owners and evidence are needed?
Apply the lesson
Prepare a one-page board brief separating the baseline, stress impact, proposed action, dependencies, accountable owner and decision date. Explain the calculation and the practical limits of the action.
This open sample does not record learner completion or issue a certificate. Progress tracking becomes available after active enrolment.