Calculate technology risk capacity and headroom

What it's for

Answers the board question behind every technology-risk number: how much loss can this company actually absorb before liquidity, earnings, covenants or capital becomes the binding constraint?

What you give it

Inputs split into evidence read from your connected systems, calibration your team owns, and numerical controls that affect precision but never the result's meaning.

{
  "cvar_loss_limit": 120,
  "economic_capital_limit": 100,
  "expected_loss_limit": 30,
  "financial_scenarios": [
    {
      "capital_loss_capacity": 80,
      "covenant_loss_capacity": 70,
      "earnings_before_technology_loss": 80,
      "id": "base",
      "liquid_resources": 100,
      "minimum_earnings": 20,
      "minimum_liquidity_buffer": 50,
      "probability": 0.8,
      "technology_loss": 10
    },
    {
      "capital_loss_capacity": 90,
      "covenant_loss_capacity": 80,
      "earnings_before_technology_loss": 100,
      "id": "stress",
      "liquid_resources": 120,
      "minimum_earnings": 20,
      "minimum_liquidity_buffer": 50,
      "probability": 0.15,
      "technology_loss": 40
    },
    {
      "capital_loss_capacity": 140,
      "covenant_loss_capacity": 120,
      "earnings_before_technology_loss": 170,
      "id": "severe",
      "liquid_resources": 180,
      "minimum_earnings": 20,
      "minimum_liquidity_buffer": 50,
      "probability": 0.05,
      "technology_loss": 100
    }
  ]
}

What you get back

This is the actual output of running the example above — computed by the same function the platform calls, not an illustration.

{
  "appetite": {
    "cvar_loss": {
      "headroom": 20,
      "headroom_fraction": 0.1667,
      "limit": 120
    },
    "economic_capital": {
      "headroom": 19,
      "headroom_fraction": 0.19,
      "limit": 100
    },
    "expected_loss": {
      "headroom": 11,
      "headroom_fraction": 0.3667,
      "limit": 30
    }
  },
  "decision": "within_capacity",
  "detail_truncated": false,
  "failed_gates": [],
  "financial_absorption": {
    "binding_probability_by_constraint": {
      "capital": 0,
      "covenant": 0.05,
      "earnings": 0,
      "liquidity": 0.95
    },
    "breach_probability_by_constraint": {
      "capital": 0,
      "covenant": 0,
      "earnings": 0,
      "liquidity": 0
    },
    "current_breach_probability": 0,
    "expected_absorption_capacity": 56.5,
    "maximum_breach_probability": 0.05,
    "maximum_supported_loss_multiplier": 1.75,
    "unbounded_within_represented_scenarios": false,
    "worst_current_headroom": 20
  },
  "finding": "technology_loss_supported_by_financial_capacity",
  "governance": [
    "Liquidity, earnings, covenant and capital buffers are finance, treasury and legal inputs; repository activity cannot estimate them.",

How it works

Decision analysis — Turn uncertainty, cost and risk appetite into a defensible choice, with the reasoning left inspectable.

1. 1 Preserve each finance-owned joint scenario containing technology loss and its simultaneous liquid resources, protected liquidity, earnings floor, covenant capacity and capital capacity; never sort their marginals independently.
2. 2 Calculate expected loss, exact probability-mass VaR/CVaR and economic capital, compare each to approved appetite, and compute current breach probability against the minimum financial absorption capacity in every scenario.
3. 3 Reverse-stress the entire loss vector to find the largest multiplier whose probability of exceeding any financial buffer remains inside appetite, then rank first-breach scenarios and probability-weighted binding constraints.

Before you trust it

Every tool in the catalog ships with the conditions under which its answer is meaningful — and the conditions under which it should abstain instead of guessing.

Calibrating it to your org

Calibration workflow

1. 1 Define the management decision, target outcome, aggregate unit, privacy boundary, cadence, and prediction/intervention horizon for this organization.
2. 2 Build a tenant-scoped historical cohort using only information available before each prediction or decision; preserve zero periods, censoring, assignment probabilities, and unresolved outcomes when the method requires them.
3. 3 Estimate statistical parameters on training history, but obtain costs, utilities, risk tolerance, practical-effect thresholds, capacity, and policy constraints from accountable decision owners.
4. 4 Validate on later time windows or held-out aggregate units at the deployment grain, against a simple baseline and the function-specific validation strategy.
5. 5 Deploy only if the returned decision clears evidence, overlap, calibration, robustness, and guardrail checks; warning, unsupported, schema-gap, and fallback decisions are abstentions.
6. 6 Monitor realized outcomes, data drift, coverage, and decision regret; recalibrate at a governed cadence or after a detected regime/definition change, never merely because a stakeholder dislikes the result.

Call it from your AI

You don't wire up 388 tools in your MCP client. The GitRevio MCP server exposes 18 tools, three of which let an agent search the catalog, read a tool's schema, and run it — so the assistant finds this one on its own.

gitrevio_capabilities_search
  { "q": "translate technology loss into boardlevel risk" }
  → finds "calculate_technology_risk_capacity_and_headroom"

gitrevio_capability_describe
  { "capability_id": "calculate_technology_risk_capacity_and_headroom" }
  → returns the input schema and agent guidance shown on this page

gitrevio_capability_run
  { "capability_id": "calculate_technology_risk_capacity_and_headroom", "arguments": { ... } }
  → returns the result shown above

Works in Claude Desktop, Claude Code, Cursor, Cline, Continue.dev, Goose and Aider. See the MCP server.

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