Economic Capital

From Open Risk Manual

Definition

Economic Capital denotes a set of concepts, tools and processes that aim link the capital structure of the firm to its risk management profile and objectives

Applications

  • Asset liability management (ALM)
  • Financial planning (merger and acquisition analysis, business growth strategies and capital management)
  • Regulatory compliance. Use of internal risk management models in the satisfaction of SREP / ICAAP
  • Investment strategy
  • Risk Pricing
  • Reserving
  • Risk Hedging
  • Risk Attribution.

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