The sum of a bank’s assets and off-balance sheet exposures weighted by their corresponding risk. The weights depend on each asset’s probability of default and potential losses and can be calculated using internal ratings formulas. The measurement was set by The Bank of International Settlements and is used in defining Basel capital adequacy ratios. According to Basel III, a bank must hold at least 7% of its Risk-Weighted Assets in high quality capital. During market stress, risk ratings can increase, putting pressure on banks to raise capital in order to maintain the same level of capital adequacy.