A New Approach to Risk Attribution and Its Application in Credit Risk Analysis

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ID: 109952
2020
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Abstract
How can risk of a company be allocated to its divisions and attributed to risk factors? The Euler principle allows for an economically justified allocation of risk to different divisions. We introduce a method that generalizes the Euler principle to attribute risk to its driving factors when these factors affect losses in a nonlinear way. The method splits loss contributions over time and is straightforward to implement. We show in an example how this risk decomposition can be applied in the context of credit risk.
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frei2020risksa Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Christoph Frei;Frei, Christoph;
Journal risks
Year 2020
DOI
10.3390/risks8020065
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