Background on the question: When calculation the RWA with a confidence interval, some of the calculated value of RWA-- may be negative. p-- is the smallest negative value which affect the value of RWA--. ... In this sense, p-- should not be negative and, consequently, the RWA-- should also not be negative.

How is RWA calculated?

Banks calculate risk-weighted assets by multiplying the exposure amount by the relevant risk weight for the type of loan or asset. A bank repeats this calculation for all of its loans and assets, and adds them together to calculate total credit risk-weighted assets.

How do you reduce RWA?

tactical initiatives can significantly reduce rWA levels in the near-term by adjusting product structures, tracking specific loan terms, managing limits, and improving risk transfer strategies while limiting the impact on the business.