Regulatory capital requirements ensure banks and insurers maintain buffers against unexpected losses, reducing systemic risk. Basel III for banks and Solvency II for insurers set frameworks based on credit, market, and operational risk exposures. Capital is classified into tiers: Tier 1 (core equity) is highest quality, while Tier 2 includes subordinated debt. For instance, a bank with $500 billion in risk-weighted assets and an 8% requirement must hold $40 billion in capital. Insufficient capital can trigger supervisory action, dividend restrictions, or resolution proceedings. Capital planning integrates stress testing and strategic growth plans.