Emerging Practices for Capital Adequacy © Copyright 2003, CCRO. All rights reserved. 60 X. NEXT STEPS A number of issues remain unresolved in this paper and are still being debated. For example, the CCRO has identified a disconnect between using a book value-based method for determining net assets and an economic value-based method for determining economic capital. If the book value underreports the actual value of a company’s assets, its use would underestimate the capital adequacy. A clear resolution to this disconnect has not been determined, but there are two possible approaches that could be considered. First and most directly, use an economic value-based method for determining net assets. Second, use some adjustment factor to reduce the economic capital to an estimated book value economic capital. It is still unclear whether a consistent method for determining this adjustment factor exists. Finally, in the area of operative risk, there should be more consideration of an energy risk occurrence taxonomy coupled with the development of an internal rating-based scorecard for qualitative assessment.