Value at Risk (VaR) is a statistical measure used to assess the potential loss in value of a portfolio over a defined period for a given confidence interval. It helps financial institutions understand their risk exposure and is a critical component in risk management and regulatory compliance frameworks.

Value At Risk

Value at Risk

In programming, 'var' is a keyword used to declare variables in languages like JavaScript, indicating that the variable's type can change and its scope is limited to the function in which it is declared. It's a fundamental concept for managing data storage and manipulation within code, allowing for dynamic typing and function-level scoping.

A statistical measure is a value that represents a characteristic of a dataset, providing insights into its distribution, central tendency, or variability. These measures are essential for summarizing data, making comparisons, and drawing conclusions in research and data analysis.

statistical measure

potential loss

portfolio

defined period

A confidence interval is a range of values, derived from sample data, that is likely to contain the true population parameter with a specified level of confidence. It provides a measure of uncertainty around the estimate, allowing researchers to make inferences about the population with a known level of risk for error.

confidence interval

Financial institutions are organizations that facilitate the flow of capital and provide financial services to individuals, businesses, and governments, playing a crucial role in the economic stability and growth of a nation. They encompass a wide range of entities, including banks, credit unions, insurance companies, and investment firms, each serving distinct functions within the financial system.

financial institutions

risk exposure

Risk management involves identifying, assessing, and prioritizing risks followed by coordinated efforts to minimize, monitor, and control the probability or impact of unfortunate events. It is essential for ensuring that an organization can achieve its objectives while safeguarding its assets and reputation against potential threats.

risk management

Regulatory compliance involves adhering to laws, regulations, guidelines, and specifications relevant to an organization's business processes. It is essential for mitigating legal risks, ensuring ethical conduct, and maintaining operational integrity across various sectors.

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