Development and Implementation of Alternative Concept for Expected and Unexpected Losses in Corporations
Development and Implementation of Alternative Concept for Expected and Unexpected Losses in Corporations

Summary/Abstract: The study suggests alternative conception of expected and unexpected losses in corporations. Unlike the classical conception, it suggests backing up expected losses with risk capital, taking into account loss causes during different phases of business cycle. Whereas unexpected losses that are the source of uncertainty should be adjusted based on adapted VaR method tests, stress tests and limitations that include principles of dynamic back up allocations. That should ensure timely forecast of significant financial risks guaranteeing efficient development of risk profile of corporations, and in the end increasing potential for efficient control on financial risks. From the standpoint of further conception advancing, a method for determining unexpected VaR losses was developed and implemented; it is supported with special software dedicated to bankruptcy risk symptoms identification in corporations.

• Details
• Contents