223. Through the assessment of inherent market risk, competent authorities should determine the main drivers of the institution's market risk exposure and evaluate the risk of significant prudential impact on the institution. The assessment of inherent market risk should be structured around the following main steps:
a. preliminary assessment;
b. assessment of the nature and composition of the institution's positions subject to market risk;
c. assessment of profitability;
d. assessment of market concentration risk; and
e. outcome of stress testing.
Preliminary assessment
224. To determine the scope of the assessment of market risk, competent authorities should first identify the sources of market risk to which the institution is or may be exposed. To do so, competent authorities should leverage the knowledge gained from the assessment of other SREP elements, from the comparison of the institution's position to peers and from any other supervisory activities.
225. As a minimum, competen
…