What is valuation rule in SAP IS-B-RA - Risk Analysis?

SAP Term: valuation rule

• Component: IS-B-RA

• Component Name: Risk Analysis

• Description: Rule for controlling how a subset of transactions is valued in . The valuation rule is used for determining the market data, controlling external valuation or the compression of cash flows, for example. The valuation rule can be assigned to a transaction by means of the transaction's financial object. If summarization has been activated, for accounts and variable transactions the valuation rule in the financial object is ignored. Instead, the valuation rule stored in Customizing is read by means of the assignment to the summarization rule. In all other cases the assignment of the valuation rule depends upon the underlying transaction. The valuation rule overwrites the evaluation type, which is the default for the evaluation.

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• Key Concepts: 
  Valuation rule is a component of the IS-B-RA Risk Analysis module in SAP. It is used to define the valuation of a risk based on its probability and impact. The valuation rule is used to calculate the expected value of a risk, which is then used to determine the risk's priority and the appropriate response. 
  
  How to use it: 
  Valuation rules are created in the Risk Analysis module of SAP. The user can define the probability and impact of a risk, as well as the expected value of the risk. The user can also define how the expected value should be calculated, such as using a linear or exponential formula. 
  
  Tips & Tricks: 
  When creating a valuation rule, it is important to consider how the expected value will be calculated. Different formulas may yield different results, so it is important to choose one that accurately reflects the risk's probability and impact. 
  
  Related Information: 
  The valuation rule is closely related to other components of the Risk Analysis module, such as risk categories and risk responses. It is also related to other modules in SAP, such as Financial Accounting and Controlling.