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
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.