Risk Budgeting?

CFA Level III
#1

How does a company actually allocate risk in accordance with its VAR? If VAR is calculated on a total portfolio basis, how then are capital allocations made with specific risk quantities, how do you break out the specific risk quantities to know how much you’re allocating where?

Thanks for any help.

#2

Allowed var budgets and limits values must be compared side by side with return on capital allocations for both entities or managers to determine how efficient they have utilised capital allocations.