Introduction to Risk-Weighted Assets

Introduction to Risk-Weighted Assets

Moorad explains the purpose of risk-weightings, how they work and how they are assigned and applied.
Overview

Risk weighted assets are an adjustment that banks make to their loan book in order to account for the inherent default risk associated with an individual asset. There are several different approaches to assigning a rating including the regulations of the Basel Committee and a bank’s own internal process.

Key learning objectives:

  • Define risk weighted assets

  • Understand how risk weightings are assigned

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