Economic capital

{
  "id": "MLC-T-INS-001251",
  "term": "Economic capital",
  "field": "Insurance and risk management",
  "definition": "The amount of capital a firm needs to absorb unexpected losses over a specific time horizon and at a given confidence level, reflecting its true risk profile. It is calculated using internal risk models and considers all quantifiable risks, including market, credit, and operational risks. This metric is distinct from regulatory capital, which is mandated by supervisory authorities.",
  "url": "https://mlchart.com/terminology/insurance/economic-capital/"
}