Risk-weighted asset is a bank's assets or off-balance-sheet exposures, weighted according to risk. This sort of asset calculation is used in determining the capital requirement or Capital Adequacy Ratio (CAR) for a financial institution. In the Basel I accord published by the Basel Committee on Banking Supervision, the Committee explains why using a risk-weight approach is the preferred methodology which banks should adopt for capital calculation:it provides an easier approach to compare banks across different geographies off-balance-sheet exposures can be easily included in capital adequacy calculations banks are not deterred from carrying low risk liquid assets in their books