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RISK CAPITAL ATTRIBUTION AND RISK-ADJUSTED PERFORMANCE MEASUREMENT
Our final chapter takes a look at the roles of risk capital, and at how risk capital can be attributed to business lines as part of a risk-adjusted performance measurement (RAPM) system. This problem brings together many of the themes we’ve discussed so far. RAPM represents a key challenge for financial institutions and non-financial firms around the world today. Only by forging a connection between risk measurement, risk capital, risk-based pricing, and performance measurement can firms ensure that the decisions they make reflect the interests of stakeholders such as bondholders and shareholders.
What Purpose Does Risk Capital Serve?
Risk capital is the cushion that provides ...
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