Fitch introduced its new economic capital model yesterday, asserting it was the most significant event in this area since the introduction nearly 20 years ago of risk-based capital measurements.

Fitch analyst James Auden said the model called Prism advances the game by taking a factor-based platform such as RBC to a full stochastic platform with random variables.

“This allows all risks within a business to be modeled simultaneously and interactively, unlike factor models that look at each risk in isolation,” he said.

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