Making Economic Capital Work
- Topics:
- Enterprise Risk Management
- Tags:
- Business Operations,
- Calculation,
- Management,
- Modeling,
- Operational Planning,
- PricewaterhouseCoopers Consulting,
- Research & Development,
- Strategy
- Source:
- PricewaterhouseCoopers
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Overview: The article gives details on the concept of calculation of economic capital that is a process that begins with the quantification of risks that any given company faces over a given time period. The company’s management, in accordance with its needs, defines the risks and the time period. The process entails analyzing what the potential losses could be, then calculating the sum of the losses and determining the probability of a loss that size. The risk appetite of the company's owners and investors is taken into account in the calculations. This article explains modeling parameters, calculation process, calculable elements of risk, economic capital and business planning and implementation of the system in its contents.
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Format: HTML | Date: Aug 2003 | Pages: 1
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