Kentucky Finance

May 16 2018

Value At Risk (VaR)

#var #insurance # Value At Risk – VaR BREAKING DOWN ‘Value At Risk – VaR’ VaR modeling determines the potential for loss in the entity being assessed, as well as the probability of occurrence for the defined loss. VaR is measured by assessing the amount of potential loss, the probability of occurrence for the amount of loss and the time frame. For example, a financial firm may determine an asset has a 3% one-month VaR of 2%, representing a 3% chance of the asset declining in value by 2% during the one-month time frame. The conversion of the 3% chance …