standardised approach would become the binding constraint. The potential unwanted outcome would be to reduce incentives to improve banks' internal models, which could not be good for risk management," the document says. However, the industry body accepts the review's recommendation to start using expected shortfall as the new standard risk metric -- albeit at a reduced confidence level of 95%, rather than the committee's proposed 99% -- on the basis that it satisfies a mathematical property known as subadditivity, which VAR does not. Isda and the Basel Committee were not able to respond to requests for comment by press time. The question of whether funding valuation adjustment (FVA) should be incorporated when pricing derivatives has split opinion between academics and practitioners (www.risk.net/tag/funding-valuation-adju\\... What is your view?