tag:blogger.com,1999:blog-235433516644980443.post3374591886166325000..comments2024-03-27T05:08:10.195-04:00Comments on Jeff For Banks: Risk Adjusted Return on Capital (RAROC) for Financial InstitutionsJeff Marsicohttp://www.blogger.com/profile/12153599647481141591noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-235433516644980443.post-40474262839701996902012-05-09T12:06:37.875-04:002012-05-09T12:06:37.875-04:00Dave,
Glad I got the passion up! You also bring u...Dave,<br /><br />Glad I got the passion up! You also bring up a valid point on CLTV. But RAROC need not be complicated. Perhaps defining Capital Assignment and Risk Weights is the most challenging (and sometimes subjective) part. If well defined, the rest is easy, in my opinion.<br /><br />Tom,<br /><br />I think risk varies by institution due to its strategy, geography, and customer base. So creating an FI specific RAROC analysis versus a regulatory one is important, in my opinion.<br /><br />Thanks for the comments!<br /><br />~ JeffJeff Marsicohttps://www.blogger.com/profile/12153599647481141591noreply@blogger.comtag:blogger.com,1999:blog-235433516644980443.post-80567654070494496722012-05-09T09:25:04.541-04:002012-05-09T09:25:04.541-04:00Each risk component IS like a piece of glass in a ...Each risk component IS like a piece of glass in a mosaic, you must view the risk profile from a distance to gauge its overall strategic vision. The world of risk IS complicated, using RAROC is a must. To do less would be like driving at night with your right eye closed and then wondering where the colliding truck came from. A clearer vision of risk and the understanding of it makes for a more profitable journey...The Soaring Eaglehttps://www.blogger.com/profile/12257972473954196706noreply@blogger.comtag:blogger.com,1999:blog-235433516644980443.post-68140245149372750642012-05-09T00:28:17.292-04:002012-05-09T00:28:17.292-04:00As a follow up to my comments, I created a bundle ...As a follow up to my comments, I created a bundle of links all related to RAROC. Please check it out: http://bitly.com/KOqhq6David Gerbinohttps://www.blogger.com/profile/16582273033896954219noreply@blogger.comtag:blogger.com,1999:blog-235433516644980443.post-89143840544987922432012-05-09T00:07:08.301-04:002012-05-09T00:07:08.301-04:00Jeff,
as a Bank Marketer, please tell the people ...Jeff,<br /><br />as a Bank Marketer, please tell the people who criticize your RAROC inclusion in your ABA School of Bank Marketing Management program that RAROC is a must. It is a Financial Marketing 101 requirement. If students find it too hard, they should work harder. I have worked in many industries and each had a risk component to profitability. I learned that in my second job, as my mentor taught be the bad debt and attrition risk factors that were used in the customer life time value (CLTV) models. <br /><br />It would not surprise me if many of the banks that were closed by regulators over the last few years did not have a robust RAROC program.<br /><br />RAROC is so important for ALL financial institutions. <br /><br />@dmgerbinoDavid Gerbinohttps://www.blogger.com/profile/16582273033896954219noreply@blogger.com