71. To form a view on the plausibility of an institution's strategic assumptions, competent authorities should undertake an analysis of the business environment. This takes into consideration the current and future business conditions in which an institution operates or is likely to operate based on its main or material geographic and business exposures. As part of this assessment, competent authorities should develop an understanding of the direction of macro-economic and market trends and the strategic intentions of the peer group.
72. Competent authorities should use this analysis to develop an understanding of:
a. the key macro-economic variables within which the relevant entity, product or segment being assessed operates or will operate based on its main geographies. Examples of key variables include gross domestic product (GDP), unemployment rates, interest rates and house price indices.
b. the competitive landscape and how it is likely to evolve, considering the activities of th
…