Risk Accounting an overviewRisk Accounting

Risk Accounting is our Enterprise Risk Management (ERM) solution. 

The Risk Accounting method incorporates a risk quantification technique that produces, for the first time, standardized measures of exposure to risk relative to all forms of risk. Exposures to risk are quantified using a standardized additive unit of measurement unique to risk accounting... the 'Risk Unit' or 'RU'. Outputs in RUs are fully aggregatable across all horizontal and vertical dimensions of an enterprise to produce risk reports by risk type, business line, product, customer, legal entity and geography.

Leading academics and practitioners have independently reviewed the method and their findings were published in an academic journal. Click here for the associated press release.

Comments included:

"...represents a sizeable step forward in the search for a practical global solution to ERM"

"...the London Whale trading loss... Here, the Risk Unit (RU) would bloom"

"...a very useful conceptual framework that could serve as a baseline for fulfilling the needs of BCBS 239, with a relatively simple to implement approach"

"The Risk Unit (RU) is the first mechanism proposed to integrate the major components of risk in a large institution"

"...proposed framework is both novel in addressing the limitations of existing ERM risk measurement frameworks and practical in adapting the control and reporting frameworks that already exist in accounting and general ledger systems"

"The framework presented... harmonizes all quantifiable risks and valuation uncertainties into one consistent framework without getting bogged down with specific risk models, methodologies and calibrations"

"The Risk Accounting (RA) approach could be a meaningful way of establishing a common metric for operational risk, an area in risk management, which, after many years, is still lacking analytical rigour"

For more information on Risk Accounting contact us at agrody@financialintergroup.com.