I am not really sure I understand the meaning of Risk weight defined as
RW = RWA/EAD,
EAD = Exposure at Default
RWA = Risk-Weighted assets
From a bank's perspective: If I have two portfolios, over two time periods, of customers and each customer is given an EAD and RWA. Does it make sense comparing the mean RW of each portfolio? (For example by computing the RW for each customer, sum them and divide by number of customers)
Why not for example just look at the total RWA?
I know that each customer, depending on credit rating, is assigned a risk weight which is a percentage.