 Sam
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 Posted: Fri Apr 09, 2004 2:54 am Post subject: Risk-based Capital |
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Risk Based Capital is a capital standard adopted for saving institutions in 1989.
Facts:
It requires saving institutions to hold more capital for higher risk assets, which is 8 percent of risk weighted assets. It is the minimum amount of capital necessary to involve losses, marked by severely adverse circumstances. Taking into consideration the size and degree of risk insurer takes, it is used to set up capital requirements. It includes the measurement of four important risk categories for getting an overall risk based capital amount, which are:
- Asset risk.
- Credit risk.
- Underwriting risk.
- Off Balance sheet risk.
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