Basel 3.1 readiness guide
A practitioner's guide to Basel 3.1 in the UK: what applies on 1 January 2027, what to have ready and what the PRA will look for. Free to read.
By Mark Dougherty, CPA (CAN)Risk Education · Training
Risk training for boards and NEDs
Board risk training is RiskTAE’s training for the boards, non-executive directors and risk committees of UK banks, building societies and lenders, taught by people who have done the work in front of a regulator. It covers capital, liquidity, risk appetite, recovery planning and the accountability that comes with the role, built on your own framework, models and regulatory history.
Your directors leave able to read the capital and liquidity numbers, challenge the executive on them, and approve an ICAAP or ILAAP knowing what they are signing.
1 January 2027Basel 3.1 and the SDDT capital regime apply
1 October 2025Solvent exit planning applies to non-systemic banks
Audience
Who is board risk training for?
The boards and non-executive directors of banks, building societies and other lenders the PRA regulates, and their risk committees.
Three groups ask for it most. Risk committee chairs, who hold the PRA’s SMF10, and their members, who at a significant firm must have the knowledge, skills and expertise to understand and monitor the risk strategy and the risk appetite. New non-executives, who need what SS5/16 calls sufficient current and relevant knowledge and experience, including sector experience. And whole boards facing a first ICAAP under Basel 3.1 or the SDDT regime, a new recovery plan or a supervisory letter.
Company secretaries and heads of risk usually commission it; training providers commission it as a white-label programme.
Sources: PRA Rulebook, Risk Control Part, rule 3.1; PRA SS5/16, July 2018, paragraph 7.1.
Outline
What does a board risk course cover?
A typical outline, cut to the firm in the room.
| Module | What directors learn | The rules it rests on |
|---|---|---|
| The capital stack | Pillar 1, Pillar 2A, Pillar 2B and the PRA buffer, and why the PRA does not count one risk twice. | SS31/15; PS9/24, paragraph 6.2 |
| Basel 3.1 or the SDDT regime | What changes in risk-weighted assets from 1 January 2027; for eligible small firms, the simplified regime and its Single Capital Buffer. | PS1/26 and PS4/26, 20 January 2026 |
| The ICAAP | What the board is approving, how the stress and reverse stress tests were built, and what to ask before approval. | ICAA Part; SS31/15, or SS4/25 for an SDDT from 1 January 2027 |
| Liquidity and the ILAAP | The overall liquidity adequacy rule, the 100% LCR minimum, the survival period the firm’s own risk appetite sets, and the contingency plan. | ILAA Part; LCR (CRR) Part; SS24/15, January 2026 |
| Risk appetite | A clear and measurable statement the board owns, from which the risk control framework flows. | SS5/16, paragraphs 4.1 and 4.2 |
| Recovery and solvent exit | Recovery options, indicators calibrated against the buffers, the fire drill the board oversees and, for non-systemic firms, the solvent exit analysis. | Recovery Plans Part; SS9/17, March 2026; SS2/24 |
| Accountability | SMF4 and SMF10, the prescribed responsibilities, the duty of responsibility and its reasonable steps defence. | SS28/15, April 2026 |
Sources: PRA SS31/15, PS1/26, PS4/26, SS24/15, SS9/17, SS2/24 and SS28/15; PRA Rulebook, Recovery Plans Part.
Faculty and method
How is the course taught, and who teaches it?
By practitioners from our bench who have done the work in front of a regulator: former chief risk officers and heads of risk, former regulators and interim executives, with model and quant specialists where a session goes into the numbers, alongside professional trainers. Risk Education is led by Mark Dougherty, CPA (CAN), who contributes risk management lectures to the University of Cambridge’s Banking Executive Programme.
The case material is yours: your risk appetite statement, your last ICAAP and ILAAP, your recovery plan and the letters that came back from the PRA, with exercises on your own numbers where you provide them. One exercise that works: before we show the reverse stress test, each director writes down the scenario they think would end the business. The gap between the two lists is the afternoon’s discussion.
The same firm writes ICAAPs and builds the RisKIT models, so a live model can show what one changed assumption does to the CET1 ratio, and training can follow an advisory engagement as its handover to the board.
Formats
How long does it take, and in what formats?
Three shapes cover most requests, and we design to whichever fits: a two-hour board briefing, a one-day course or a two-day workshop.
A briefing sits inside a scheduled board or risk committee meeting; a one-day course is the usual whole-board induction on capital and liquidity; a two-day workshop suits a board preparing for its first ICAAP under the new rules and works through its own documents in full. All three run on site, online or as a mix, and we have taught worldwide, including the UK, the Middle East, Africa and South Asia.
The in-house version is built on one firm’s framework, and the Basel 3.1 course can be cut to a board audience. It starts with a 30-minute scoping call about who is in the room and what they must be able to do afterwards, then a proposed outline.
Outcome
What can the board do afterwards?
Ask better questions. Directors can follow a number back to the assumption behind it, hold the executive to a risk appetite statement the board owns, and put their own view on the record. Before approving an ICAAP they ask, at least:
- Which risks sit in Pillar 2A, and why does Pillar 1 not already cover each of them?
- What does the reverse stress test say would make the business unviable?
- Who chose the stress scenarios, and what makes them severe enough?
- Are the risk-weighted assets calculated under the rules that apply from 1 January 2027?
- Where do the recovery plan’s indicators sit against the buffers in this document?
Directors can take these questions into the approval meeting. Our one-page crib sheet, Board questions before approving an ICAAP (PDF), sets out eleven questions, each mapped to the PRA’s SS31/15 (and to SS4/25 for SDDTs from 1 January 2027) and to the section of the ICAAP where the answer should be.
If the gap on the board is a person rather than a skill, Risk Talent runs risk committee chair and NED search.
Sources: PRA SS31/15, paragraph 5.10; SS9/17, March 2026, paragraph 2.51; PS1/26, paragraph 1.23.
Failure points
What usually goes wrong with board risk training?
- A lecture on the rules, after which directors can define Pillar 2A but not say why theirs moved.
- Only the risk committee is trained. SS5/16 says committees do not relieve the board of any of its responsibilities, so the rest of the board is still approving documents it has not been taught to read.
- A minute that says approved and nothing else. SS9/17 expects the board to state its view of how far the recovery plan is credible and executable, and to oversee a fire drill on it at least every three years. Directors who know what a credible option looks like can say so.
- Challenge turns into management. SS28/15 says non-executives are neither required nor expected to assume executive responsibilities; directors learn to test the chief risk officer’s work, not redo it, and that the head of risk cannot be removed without the board’s prior approval.
Sources: PRA SS5/16, paragraph 13.1; SS9/17, March 2026, paragraphs 2.72, 2.73 and 2.84; SS28/15, April 2026, paragraphs 2.29 to 2.32; PRA Rulebook, Risk Control Part, rule 3.5.
FAQ
Questions about board risk training
Can you induct a single new director?
Yes: one director, one session, built on the firm’s own documents. Where the new director will hold a senior management function, such as chair of the risk committee, the FCA’s handover rule expects material that carries judgement and opinion, not just facts and figures, and an induction is where to work through it.
Do you cover the SDDT regime as well as Basel 3.1?
Yes. Both take effect on 1 January 2027 under PRA policy statements of 20 January 2026. An SDDT board learns the simplified regime, including the Single Capital Buffer, set no lower than 3.5% of risk-weighted assets, and the two-year ICAAP and ILAAP cycle in force for SDDTs other than new and growing banks since 20 January 2026.
Can the same people review our ICAAP before the board approves it?
Yes. Risk Advisory reviews ICAAPs and ILAAPs and gives the board a written view of the gaps before approval; training often follows as the handover.
What does board risk training cost, and does it carry CPD?
Each course is priced after the scoping call, because the length and the audience set the cost. We make no claim to CPD accreditation; firms record attendance in their own training and fitness and propriety files.
Insights
Further reading
ICAAP practitioner’s guide
How to write an ICAAP the PRA takes seriously: structure, stress testing, capital planning and board challenge, from people who write them.
By Mark Dougherty, CPA (CAN)
Appointing a risk committee chair (SMF10): a guide for nomination committees
In a UK bank the chair of the risk committee performs a senior management function of their own, SMF10, and needs PRA approval before taking up the role. The PRA requires a risk committee, and so...
By Benn Pople · 7 min readNext step
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