What Does Return on Risk Adjusted Capital Mean?

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What does Return on Risk Adjusted Capital mean? Read on to discover the definition & meaning of the term Return on Risk Adjusted Capital - to help you better understand the language used in insurance policies.

Return on Risk Adjusted Capital

Return on Risk Adjusted Capital

A target return on equity (ROE) measure in which the denominator is adjusted depending on the risk associated with the instrument or project. This is a term used in the financial services industry and in enterprise risk management (ERM). In the insurance industry, risk-adjusted return on capital (RAROC) is the term commonly used.

We hope the you have a better understanding of the meaning of Return on Risk Adjusted Capital.

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