Riskweighted
Riskweighted refers to a concept used in finance and banking to measure the capital requirements for a financial institution based on the riskiness of its assets. This approach ensures that banks hold sufficient capital to absorb potential losses arising from their investments.
The core idea behind riskweighting is that not all assets carry the same level of risk. For
Assets are multiplied by their assigned risk weight to determine their risk-weighted asset (RWA) value. For
The total RWA of a bank is then used to calculate its capital adequacy ratios. These ratios,
The Basel Accords are a set of international banking regulations that have significantly influenced the development