The price of risk: perspectives

What it is about

Yann Neto, of Meridian Training, explained at the Third Annual Risk Conference (September 19, 2025) what the price of risk is and how it relates to the implementation of mark-to-market valuation in the Dominican Republic. The presentation uses Columbus's 1492 voyage into the unknown as its thread.

The 12 slides review the etymology of the word risk, define mark to market, describe the Dominican market context, what the price of risk is and its determining factors, the phased implementation plan contemplated in the presentation, the challenges and opportunities, and the opportunity cost of not taking risks.

Objectives

• Explain the price of risk as the compensation investors demand for taking risks above the risk-free rate.
• Present mark to market as a valuation method at current market prices and its application in the country.
• Set out the challenges and opportunities of its implementation.

Key takeaways

1. Mark to market measures the fair value of assets and liabilities with their current market price rather than their historical cost.
2. The price of risk is fundamental to asset valuation and the stability of the financial system.
3. According to the presentation, implementation in the country was planned in phases, with a preparation phase, pilot tests and full implementation in the first quarter of 2026.
4. Challenges cited include updating technology infrastructure, training staff and adapting the regulatory framework.
5. Opportunities include greater transparency, integration with international markets and more proactive risk management.