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Q » Explain economic capital.

Steven

06 Dec, 2025

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A » Economic capital refers to the amount of risk capital that a company estimates it needs to remain solvent, considering its risk profile. It serves as a buffer against potential losses, ensuring the company can withstand financial stress. Typically, economic capital is calculated using internal models that account for various risks, such as market, credit, and operational risks, and is vital for strategic planning and risk management.

Michael

06 Dec, 2025

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A »Economic capital is the amount of capital required by a financial institution to absorb potential losses and maintain solvency. It is a measure of the institution's risk-bearing capacity, calculated based on the probability of unexpected losses. Economic capital is used to manage risk, allocate resources, and determine capital adequacy.

David

06 Dec, 2025

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