Risk asset ratio

In the case of a company, the proportion of debt in total capital; a popular ratio for assessing the financial stability of the company. – In the case of a bank, the proportion of assets that can bear losses (the proportion of a bank’s total capital assets that carry risk) or, expressed differently, the proportion of assets that consists of risky items (the proportion of a bank’s capital which is in risk assets). – In the insurance industry, the permission for insurance companies in Germany to invest up to thirty-five percent of their tied assets in certain higher-risk investments. In particular, profit participation rights, receivables from subordinated liabilities and hedge funds are permitted. – See bank size, Basel III, Cook ratio, profit taxation, core capital ratio, risk margin, risk-bearing capacity, Solvency II, mandatory convertible bond. – Cf. BaFin Annual Report 2005, p. 86 et seq. (detailed overviews also provided there), BaFin Annual Report 2007, p. 93 (overview, structured according to the Investment Regulation that came into force at the end of 2007). BaFin Annual Report 2009, p. 94 (composition of risk capital ratio), BaFin Annual Report 2010, p. 97 et seq. (more recent figures), BaFin Annual Report 2012, p. 101 (the proportion of 35 percent in higher-risk investments permitted under the Investment Ordinance is significantly undercut), BaFin Annual Report 2013, p. 138 et seq. (composition of the risk-based investment ratio; overall, this is 11 percent) and the respective BaFin annual report, chapter “Supervision of Insurance Companies and Pension Funds.”

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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