The 12 questions your CRO must answer before Q3

Most banks enter CRR3 live date with a +15–30% RWA uplift baked in because nobody stress-tested the answers to these twelve questions 18 months out. This is the diagnostic we run on day one of every Ezelman mandate. It is not a marketing PDF. It is the instrument.

12
Decision-grade questions
Jan '27
CRR3 go-live
50–80 bps
CET1 at stake
30 min
To read, months to fix

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Preview: the 12 questions

These are the headlines. The full PDF gives you the underlying sub-questions, the data you need, the typical failure mode we see, and the fix.

Q 01 · OUTPUT FLOOR

What is your Day-1 output-floor bite — and where exactly does it bind?

Mortgages, low-LGD corporates, specialised lending: which portfolio is carrying the floor and is the RWA density reconcilable top-down and bottom-up?

Q 02 · SA-CR DENSITIES

Have you re-run SA-CR on every exposure class under the new risk weights?

The new unrated corporate treatment, the revised residential real-estate LTV bands, the new SME supporting factor. Most banks discover 200–400 bps of density surprise.

Q 03 · IRB RE-CALIBRATION

Are your PD/LGD input floors and the removed advanced-IRB scope quantified?

LGD input floors (5% senior unsecured corporates, 10% retail mortgages) and the removal of A-IRB for large corporates/FIs — a 10–20% IRB-book uplift if unaddressed.

Q 04 · CCF REDESIGN

What's your off-balance-sheet CCF footprint under the new buckets?

Commitments that moved from 0% to 10% CCF, from 20% to 40% CCF. Every corporate revolver re-prices. We see +300–600 bps on wholesale portfolios when unchecked.

Q 05 · COUNTERPARTY CREDIT RISK

Is your SA-CCR or IMM strategy locked — and have you modelled margin period of risk correctly?

The MPoR misspecification is the most common SSM inspection finding in this space. A single margin mis-period on a derivatives book can swing 50+ bps of CET1.

Q 06 · CVA CAPITAL

BA-CVA vs SA-CVA: have you actually run the trade-off?

Most banks default to BA-CVA because it is simpler. On medium-to-large derivatives books, SA-CVA is 20–40% more capital-efficient but requires qualifying capability.

Q 07 · OPERATIONAL RISK

Is your Business Indicator calibration auditable?

The BIC replaces AMA. Scope of the three components (ILDC, SC, FC), internal-loss multiplier (ILM), netting conventions — each of these is a supervisor-grade question. One mis-booked recovery can move 10 bps.

Q 08 · MARKET RISK (FRTB)

IMA or SA? And if SA, have you quantified the DRC and residual-risk add-on?

FRTB implementation is asymmetric across jurisdictions. The ECB is pushing SA; the PRA is more permissive on IMA. Know your home-host reality.

Q 09 · LEVERAGE & LCR

Do your CRR3 changes break the leverage ratio or NSFR denominator?

Off-balance-sheet CCF re-mapping hits the leverage exposure measure too. A large retail-card book can add 80 bps to the leverage denominator nobody modelled.

Q 10 · PILLAR 3 DISCLOSURES

Are the 40+ new disclosure templates sourced, governed and sign-off ready?

The CRR3 disclosure package is a data ops programme, not a reporting tweak. Missing or mis-keyed fields are what generates the post-go-live supervisory letter.

Q 11 · DATA & SYSTEMS

Is your RWA engine orchestrating old and new CRR3 logic in parallel?

Parallel-run discipline (Q1–Q3 2026) is where programmes quietly die. If you can't generate CRR2 vs CRR3 reconcilable numbers for a full quarter, you are not ready.

Q 12 · P&L IMPACT & MANAGEMENT ACTIONS

What are your three highest-ROE management actions — and is the Board briefed?

Credit-risk mitigation repapering, portfolio re-segmentation, securitisation, IRB permission refresh. A 30–80 bps CET1 retrieval is normally on the table. Most banks leave it there.

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HM
Hannan Mohammad · Founder & Managing Partner, Ezelman20+ years on the regulatory front line at European G-SIBs. Read the latest analysis on LinkedIn.
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