A regulatory framework that requires insurance companies to maintain capital reserves proportional to the risks inherent in their business operations. The NAIC Risk-Based Capital (RBC) system calculates minimum capital requirements based on four categories of risk: asset risk (investments), underwriting risk (pricing and reserving), credit risk (reinsurance and other recoverables), and off-balance sheet risk. Insurers must file annual RBC reports, and regulatory intervention is triggered if an insurer's actual capital falls below specified RBC thresholds. The RBC ratio compares an insurer's total adjusted capital to its risk-based capital requirement. Ratios below certain levels trigger increasingly severe regulatory actions, from company action level (200%) to mandatory control level (70%), where regulators must place the insurer under regulatory control.