Notionnotional

Notionnotional is a neologism that appears in some conceptual discussions to describe the relationship between qualitative notions and quantitative notional values in financial instruments. It is not an established term in mainstream finance, and its usage is limited to theoretical or exploratory writing rather than formal standards or widely adopted practice.

Conceptually, notion refers to ideas, descriptions, or risk characterizations associated with a financial product, while notional value (or notional amount) is the nominal size of exposure used in pricing, risk calculations, and capital requirements. Notionnotional, as a heuristic, invites analysts to examine how subjective judgments about risk or purpose align with the objective magnitude of exposure. The idea emphasizes the potential gap between how a instrument is described or perceived and the actual face value that drives measurement and regulation.

Applications for notionnotional tend to appear in risk governance, scenario analysis, model validation, and product design discussions. By explicitly considering both the narrative (the notion) and the numerical exposure (the notional), teams may improve clarity about what is being measured, how risk is communicated, and how capital or pricing should reflect both qualitative and quantitative factors.

Examples are usually illustrative rather than prescriptive. For instance, in a structured product or credit instrument, notional may represent the contractual exposure, while the accompanying narrative describes risk factors or scenarios; notionnotional would be a term used to discuss how well the narrative and the exposure align. Critics note that as a nonstandard term, it can confuse stakeholders and lacks a formal definition or consensus.

See also: Notional value, Notion, Derivative, Risk management.