ACTUS is based on a modeling paradigm, in which standardized Contract Types (CTs) are the granular building blocks of the financial world. ACTUS aims to raise this standardization to a universal/global level.
Central to the paradigm is a smart and machine-readable algorithmic representation of all legal agreements and a strict separation of the known from the unknown. The only knowns are the legal agreements and possibly the current state of the risk factors.
The unknowns are the future states of the risk factors (in particular, the market, counterparty and behavioral risks).
The graphic shows, how financial contracts and current states of the risk factors (yield curves, FX rates etc.) are the core inputs. For analytical purposes, they are augmented with risk models that describe the possible future movements of the risk factors. ACTUS provides only the links to these models, not the models themselves.
Given the state of contracts and a scenario of risk factors, it is possible to derive the contract events, which then generate the expected state-contingent cash flows. From the expected state-contingent cash flows it is possible to derive the analytical metrics of interest, such as income, value and liquidity.