Risk-weighted assets

How it is used

Abbreviated RWA; it is not simply the total carrying value of assets.

Example sentences

1. Risk-weighted assets rose even though the bank's total assets barely changed.

   Changes in risk composition can alter capital exposure measures.

2. The analyst checked risk-weighted assets when explaining the lower capital ratio.

   The denominator can change a ratio without a fall in capital.

Common collocations

• calculate risk-weighted assets
• RWA density

Related terms

• capital adequacy ratioA bank's capital divided by its risk-weighted assets. It shows whether the bank has enough capital to absorb losses; Basel rules require at least 8% before extra buffers.
• exposureThe amount of money a bank could lose to a particular borrower, sector, country or market if things go wrong.

More terms: Risk Management

• credit risk
• default
• liquidity
• non-performing loan
• hedge
• market risk
• operational risk
• provision
• stress test
• credit rating
• risk assessment
• mitigate