# Economic Capital

*Risk & Portfolio — Finicade finance glossary*

The cushion of capital a firm decides it needs to survive severe losses at a chosen confidence — its own internal, risk-based answer to 'how much is enough?'. RAROC then judges returns against it.

**Related terms:** [Value at Risk (VaR)](https://finicade.com/glossary/value-at-risk), [Basel Rules](https://finicade.com/glossary/basel-rules), [RAROC](https://finicade.com/glossary/raroc)

**Taught in:** Risk Arena — Risk Budgeting & RAROC

Source: https://finicade.com/glossary/economic-capital