In risk-adjusted measures of performance, the risk metrics used are the capital allocated to a

transaction and the expected loss. The two traditional measures of risk-adjusted performances are
the RoRaC and SVA.

The RoRaC is the ratio of earnings to allocated capital used as the risk-adjustment metric:

Earnings include interest income and fees in the banking book, and are net of expected credit loss.
They can be pre-tax or after tax, and after or before, allocated operating costs. For comparison
purposes with the required return on capital of the bank, it should be calculated in the same way.