Adding Capital Allocation Methods

You can add a Capital allocation method on the Methods tab on the Allocations setup page.

You can Copy an existing method to modify instead of creating one if the setup information is similar.

1. Navigate to Setup > Allocations.
2. Select the Methods tab.
3. Select the Capital allocation method type.
4. Select Add.
5. Enter a Name for the method.
6. Select a Source.
   The available fields update based on the selected Source.
7. Select Manage if the Source is Relative Risk Ranking.

   Columns appear for Weighted Risk and Use Subtotal. Columns also appear for each capital risk component item. While the number of and names assigned to these items are user-defined, the defaults are:

   • Credit Risk - The risk that credit downgrades or defaults can cause losses to exceed expected loss levels.
   • Interest Risk
   • Valuation Risk - The risk to stocks, bonds, and other financial instruments resulting from movements in the marked price of financial instruments in which the institution has a position.
   • Operational Risk - This risk encompasses a wide variety of areas that are not classified as market or credit risk. This variety includes risks of loss arising from various types of human or technical error, legal liability, and natural disasters.
   1. Select Manage Columns to rename, add, reorder, and remove columns, and enter the Risk % for each column.
   2. Enter risk level values for each account for each column.
      You can enter values 0–5, including decimals, with 0 indicating no risk and 5 indicating the highest risk.
   3. Select Use Subtotal for an account to use the immediate parent account's assigned risk levels.
   4. Select Apply to save changes.
      You can export the Risk Level Assignment page if needed.
8. Enter Notes, if applicable.
9. Select Save.