Patent ID: 7849002

Claim:
A method of characterizing relative risks associated with a plurality of financial products performed on a computer having a hardware processor, comprising the steps of: identifying one or more risk classes associated with the plurality of financial products by using an input device of the computer; storing data in a data storage of said computer relating to prevalence of criteria associated with said risk classes; determining, for each of the risk classes, an expected occurrence rate by the processor; dividing the expected occurrence rates determined by said step of determining by an average rate by the processor and determining a relative risk ratio for each of the risk classes based on the expected occurrence rates and based on the prevalence of the criteria associated with the risk classes; calculating correlated risk ratios between at least two of the risk classes that are identified in said step of identifying and determining a dependence between the at least two different risk classes based on the correlated risk ratios; comparing the relative risk ratios and the correlated risk ratios by the processor with empirical data and generating comparative risk data to characterize the relative risks associated with the plurality of products based on the relative risk ratios and the correlated risk ratios; correcting the relative risk ratios in a case the comparative risk data is out of a defined range comparing with the empirical data; and storing the corrected risk ratios to a storage unit of the computer.