Global Advisors | Quantified Strategy Consulting

RAROC

“Risk management is designed expressly for decision makers—people who must decide what to do in uncertain situations where time is short and information is incomplete and who will experience real consequences from their decision.” — Dan Borge, creator of RAROC

Quote: Dan Borge – Creator of RAROC

Risk-Adjusted Return on Capital (RAROC) measures the risk?adjusted return earned per unit of economic capital, enabling like?for?like performance assessment, pricing, and capital allocation across activities with different risk profiles.

Term: Risk-Adjusted Return on Capital (RAROC)

“The purpose of risk management is to improve the future, not to explain the past.” Dan Borge Creator of RAROC

Quote: Dan Borge – Creator of RAROC

Return on Risk-Adjusted Capital (RORAC) evaluates the profitability of a project, business unit, or company by relating net income to the amount of capital at risk, where that capital has been specifically adjusted to account for the risks inherent in the activity under review.

Term: Return on Risk-Adjusted Capital (RORAC)

Download brochure

Our latest podcasts on Spotify

Sign up for our newsletters - free