Recital 1

(1)The assessment of the modellability of risk factors referred to in Article 325be(1) of Regulation (EU) No 575/2013 should determine the appropriate risk measure to be used by institutions to calculate the own funds requirements for market risk of every risk factor included, or which is in the process of being included, in the institutions’ alternative internal model approach set out in Part Three, Title IV, Chapter 1b, of Regulation (EU) No 575/2013. Modellable risk factors should be subject to the expected shortfall risk measure calculated in accordance with Article 325bb of Regulation (EU) No 575/2013, while non-modellable risk factors should be subject to the stress scenario risk measure, calculated in accordance with Article 325bk of that Regulation.