A source of non-traded market risk that arises from potential losses to the value of assets and liabilities of an entity outside the trading book, mainly due to volatility in value measurement when applying inconsistent accounting bases. In other words, accounting volatility risk arises when a non-trading book exposure is accounted for at amortized cost but economically hedged by a derivative that is measured using fair value. Although this is not an economic risk, the difference in measurement bases between the exposure and the hedge gives rise to volatility in the income statement.

As a non-trading book exposure, this type of risk is sub risk (risk subcategory) that contributes (by means of its respective charge) to the total non-traded market risk capital requirement. This requirement is determined by adding the different charges for each sub risk type. Calculation of charges are part of a methodology usually known as internal capital adequacy assessment process that covers in addition to accounting volatility risk other sub risks such as gap risk, basis risk, credit spread risk, pipeline risk, structural foreign exchange risk, and prepayment risk.

The framework for such risk calculations is based on selection of timeframe for historical volatility, at a certain confidence level (e.g., 99%).