Adjusted expected loss: Meaning, Criticisms & Real-World Uses

<div id="LINK_POOL" style="display:none;"> <ul> <li><a href=" Risk</a></li> <li><a href=" of Default</a></li> <li><a href=" Given Default</a></li> <li><a href=" at Default</a></li> <li><a href=" Instruments</a></li> <li><a href=" <li><a href=" Assets</a></li> <li><a href=" Cost</a></li> <li><a href=" Capital</a></li> <li><a href=" Loss Provisions</a></li> <li><a href=" Management</a></li> <li><a href=" Management</a></li> <li><a href=" Conditions</a></li> <li><a href=" Receivables</a></li> <li><a href=" Stability</a></li> <li><a href="https://www.bdo.global/en-gb/insights/assurance/ifrs/ifrs-9-explained-the-new-expected-credit-loss-model">BDO: IFRS 9 Explained</a></li> <li><a href="https://www.bis.org/bcbs/history.htm">Bank for International Settlements: History of the Basel Committee</a></li> <li><a href="https://www.federalregister.gov/documents/2019/02/14/2018-28281/regulatory-capital-rule-implementation-and-transition-of-the-current-expected-credit-losses">Federal Register: Regulatory Capital Rule CECL</a></li> <li><a href="https://www.moodys.com/outlook/ifrs-9-impairment-regulations-implementation-challenges-and-potential-solutions--PBC_1361904">Moody's: IFRS 9 Implementation Challenges</a></li> </ul> </div>

What Is Adjusted Expected Loss?

Adjusted Expected Loss (AEL) is a¹ ² ³ ⁴ ⁵ ⁶ ⁷ ⁸ ⁹ ¹⁰ ¹¹ ¹² ¹³ ¹⁴ ¹⁵