The Committee of Chief Risk Officer’s (CCRO) capital adequacy white paper, due to be published at the start of August, opens up a new era for energy company risk management. It presents a framework for measuring capital adequacy that not only looks at the traditional metrics of capital and financial liquidity, but also stresses the necessity of including economic capital within the model.
Economic capital covers market risk, credit risk and operational risk and gives a measure of the uncertai
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