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Economic capital / Other risks [20]

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Bullet points include: Can be on any of the previous RAROC allocation approaches Or on a pro-rata basis, e.g. weighted by economic capital or by reserves or by the sum of reserves and economic capital Issue is how diversification benefit is allocated Should it be ‘retained’ by the centre, or allocated to business lines / units and if the latter then how C.f. Euler capital allocation principle discussed previously

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