Why isn’t Risk-adjusted Return on Capital (RAROC) universal?

RAROC (Risk-Adjusted Return On Capital) is a 40- year-old concept. To its followers, its value is unquestioned. But the institutions that have fully implemented it remain an admired minority. Indeed, the limited use of RAROC is at odds with both its reputation and the millions of hours of effort spent by banks on risk-adjusted performance measurement without embedding it in their DNA.