What is risk parameter curve in SAP FS-LRM - Liquidity and Risk Management?

SAP Term: risk parameter curve

• Component: FS-LRM

• Component Name: Liquidity and Risk Management

• Description: A set of percentage values that can vary over time and allows to simulate processes such as selling strategies.

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• Key Concepts: 
  Risk Parameter Curve (RPC) is a feature of the FS-LRM Liquidity and Risk Management component of SAP. It is used to define the risk parameters for a given portfolio of assets. The RPC is a graphical representation of the risk parameters associated with a portfolio, such as the maximum loss, maximum drawdown, and expected return. 
  
  How to use it: 
  The RPC can be used to assess the risk associated with a portfolio and to determine the optimal risk parameters for a given portfolio. The RPC can also be used to compare different portfolios and to identify potential areas of risk. 
  
  Tips & Tricks: 
  When using the RPC, it is important to consider the time horizon of the portfolio and the type of assets in the portfolio. This will help ensure that the risk parameters are appropriate for the portfolio. Additionally, it is important to consider any external factors that may affect the performance of the portfolio, such as market conditions or political events. 
  
  Related Information: 
  The FS-LRM Liquidity and Risk Management component of SAP also includes features such as stress testing, scenario analysis, and capital optimization. These features can be used in conjunction with the RPC to further assess and manage risk in a portfolio.