ABSTRACT
In Section 6.1 of the previous chapter a set of elements to fully describe a capital allocation problem were identified. Nonetheless, two of those elements are of main importance: the assignment criterion and the functions used to simplify the information provided by each random loss. So, one could think that guidelines about how capital should be shared among firm’s units are basically defined in terms of two components: (1) a capital allocation criterion and (2) a risk measure. The choice of the specific form for each component is essential as different capital allocation solutions result from the specific selected combinations.
