📄️ Contract Behavior Risk Models
In earlier sections, we discussed market risk, where all contracts in a simulation experience the same projected market values, leading to consistent and aggregatable cash flows and events. However, real-world financial contracts are also influenced by contract-specific and counterparty behaviors, introducing additional uncertainty.
📄️ Setting Up a Sample
The actus-riskservice-ce component in ACTUS Quickstart includes a sample two-dimensional prepayment behavior risk model for analyzing prepayment risks in loan contracts.
📄️ Activating the Model for Simulation
Once a prepayment behavior model is included in a risk scenario, individual contracts must specify which behavior models to activate during simulation.
📄️ Market Risk vs. Behavior Risk
ACTUS simulations can run under two different scenarios:
📄️ Sample Contract Simulation
Here We Simulate Principal At Maturity (PAM) loan contracts with risk factors to analyze borrower payment patterns and cash flow impacts.