Regulatory Technical Standards on residual risk add-on
- Status: Adopted and published in the Official Journal of the EU
The Regulatory Technical Standards (RTS) on residual risk add-on (RRAO) clarify the scope of the RRAO, i.e. for which instruments the own funds capital requirements for residual risks should be determined. In particular, these RTS specify a non-exhaustive list of instruments bearing residual risks, and a list of risks that, in themselves, do not constitute residual risks. These RTS also clarify that longevity risk, weather, natural disasters and future realised volatility should all be considered as exotic underlyings.