Earnings at Risk (EaR)

Earnings at risk (EaR) is a risk measurement of the amount by which net income may adversely change due to interest rates fluctuations. In other words, Earnings at risk (EAR) helps organizations to evaluate how changes in interest rates may affect the organization’s earnings.

The difference between Value at Risk (VaR) and Earnings at risk (EAR) is that EaR measure only changes in the cash inflows from earnings whereas VaR measures total loss on a certain portfolio of financial instruments.



Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s