How To Fix RY340 - Risk factor &1/&2 is ignored due to zero volatility

RY340 - Overview

• Message type: E = Error

• Message class: RY - Messages for RM Basis

• Message number: 340

• Message text: Risk factor &1/&2 is ignored due to zero volatility

What causes this issue?

The volatility of risk factor &V1&/&V2& is zero. Given that no risk
relates to this risk factor, this risk factor is not considered in the
calculation. Consequently, the covariance matrix is built without
considering this risk factor.

System Response

The system issues an error message and will not allow you to continue with this transaction until the error is resolved.

How to fix this error?

Procedure for System Administrators

Error message extract from SAP system. Copyright SAP SE.

Smart SAP Assistant

• What is the cause and solution for SAP error message RY340 - Risk factor &1/&2 is ignored due to zero volatility ?

  The SAP error message RY340 indicates that a specific risk factor is being ignored because its associated volatility is zero. This typically occurs in the context of financial calculations, such as those related to risk management, derivatives pricing, or financial modeling within SAP systems.
  
  Cause:
  
  
  Zero Volatility: The primary cause of this error is that the volatility for the specified risk factor (denoted as &1/&2 in the message) is set to zero. In financial models, volatility is a crucial input for calculating risk and pricing derivatives. A zero volatility implies that there is no uncertainty or variability in the price of the underlying asset, which is often unrealistic.
  
  
  Data Entry Issues: There may be an issue with how the volatility data was entered or calculated. This could be due to incorrect data input, missing data, or a failure in the calculation process.
  
  
  Model Configuration: The financial model or configuration in SAP may not be