Risk and reward values are calculated for many types of deal mechanisms. There are two types of values for risk and reward: margin and amount.
The risk margin is the percentage by which actual turnover would have to decrease relative to forecast turnover over the remainder of the deal term for the currently forecast turnover band to be missed. Similarly, reward margin is the percentage increase required to reach the turnover band above.
Risk and reward amounts are then calculated for a deal by determining the amount the forecast earnings would change over the remainder of the deal term if the actual turnover decreased / increased by the deal's risk and reward margins.