ICR: A Composite and Automatable Index for Bank Risk Diagnosis Based on Capital, Solvency, and Leverage
DOI:
https://doi.org/10.9771/rcufba.v19i2.69685Keywords:
Banking Risk, Regulatory Capital, Prudential Indicators, Regtech, Financial RiskAbstract
The assessment of banking risk remains fragmented, technical, and often inaccessible to most market participants, limiting comparability across institutions and reducing the quality of investment and exposure decisions. This article introduces the Composite Risk Index (ICR) as an innovative technological solution designed to diagnose banking risk in an automated, visual, and replicable manner using public and regulatory data. The model integrates three prudential pillars, Basel Index, Solvency, and Leverage, through a transparent formula that automatically penalizes institutions operating below minimum regulatory thresholds. Implemented as a functional MVP, the ICR includes automated spreadsheets that enable adoption by risk analysts, compliance managers, investment funds, public agencies, and companies with multiple banking relationships. Applied to 150 Brazilian financial institutions using real data from 2020 to 2024, the model was also tested on banks that experienced moments of stress, demonstrating its predictive capability. The results show that the ICR contributes to a standardized, agile, and accessible reading of banking risk, with the potential to strengthen strategic decision-making in a financial system characterized by information asymmetry and regulatory complexity.Downloads
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