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return on risk-adjusted capital (RORAC)

A target return on equity measure in which the denominator is adjusted depending on the risk associated with the instrument or project.

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Additional Information

This is a term used in the financial services industry and in enterprise risk management (ERM). In the insurance industry, risk-adjusted return on capital (RAROC) is the term commonly used.

Related Terms

Enterprise risk management (ERM) is a holistic approach to identifying, defining, quantifying, and...