Economic Capital and Risk-Adjusted Performance Measurement
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Financial institutions, financial risk management, risk management, financial risk, banking, operational risk, credit risk, risk mitigation, financial risk manager, financial risk analysis, bank
Industry :
Banking, Asset Management
Functional Area : Business Processes, Capital Management |
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About "Economic Capital and Risk-Adjusted Performance Measurement" topic:
Advances in underlying risk measurement allow for increased sophistication when considering risk in capital allocation and performance measurement. The emergence of these methods allows an organization to better enhance shareholder value and meet regulatory expectations, such as Basel II Pillar 2. Share insights on development of economic capital and risk-adjusted performance measurement frameworks that aggregate risk exposures and consistently measure performance across diverse products.
1 insight
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on topic: "Economic Capital and Risk-Adjusted Performance Measurement"
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(rate this)
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ROIC
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ROCE
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Vinod kumar
| Argues in support of
" ROIC"
| 1 year ago
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i think ROIC is better because it gives an easy way to assessing how well company is running and generate cash flow relative to invested capital.
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Mathew Cherian
| Argues in support of
" ROCE"
| 3 years ago
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ROCE is better known as ROA and is known as the 'acid test' one of the most important measures of a companies performance. Interest cost is controlable cost so ROIC or known as ROI is a secondary measure of corporate performance.
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Kausik Panda
| Argues in support of
" ROCE"
| 3 years ago
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ROCE might be a better measure of value creation. ROCE is a pre-tax measure of return on capital, so if the firm has debt, it is inappropriate to compare it directly to WACC.
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Debate: " What is the better measure of return on capital, ROIC or ROCE?" deleted from your view.
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Yes
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No
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Varun Sood
| Argues in support of
"No"
| 3 years ago
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I think Basel II is fine. Basel II needs a fundamental rethink. That rethink must address the systemic issues that individual firms cannot, and recognize the homogenizing, pro-cyclical failings of consensus thinking. It may just be time for a...
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Gandhi Rajan
| Argues in support of
"Yes"
| 3 years ago
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We need a Basel III for a new order. We are probably having recession and food price inflation at the same time. That is what makes this different. This is a serious financial crisis of our lifetime. It is the end of an era. The Basel II agreement...
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Debate: "Is it time for ‘Basel III’?" deleted from your view.
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Economic capital is the capital requirement of a financial intermediary who has risky lending practices u. International Bank of Resettlement has fixed some constants which one has to multiply the liabilities and the risky portfolio lended out and add them up to come up with this capital requriement. Instead of Liability usually gross capital is taken and the resut is net capital so the process is termed netting. Risk adjusted performance measure is the normal performance measure say Ks multiplied by the exponetial of probability of default which is called the risk nuetral return. Note: Suppose if a bond is selling at 108 then survival probability is 1/108((Px100+(1-P)50)=100 where 50% is t...
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