What is Risk Weight?
Risk Weight A regulatory factor used to assess the riskiness of an asset or exposure, determining the required capital to be held against that risk under solvency or capital adequacy regimes.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Risk Weight” Used in Practice?
Assets with a higher risk weight require insurers to allocate more regulatory capital under Solvency II rules.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Risk Weight?
A regulatory factor used to assess the riskiness of an asset or exposure, determining the required capital to be held against that risk under solvency or capital adequacy regimes.
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