THE EVALUATION OF RISK REGARDING INSURANCE. STATISTICAL METHODS OF RISK DISSIPATION

Value at risk (VaR) is a summary statistic that quantifies the exposureof an asset or portfolio to market risk. Value at risk is now viewed by many as indispensableammunition in any serious corporate risk manager’s arsenal. VaR is often used as anapproximation of the maximum reasonable loss a company can expect to realize from all itsfinancial exposures. The purpose of any risk measurement system and summary risk statistic isto facilitate risk reporting and control decision. VaR certainly is not the only way a firm cansystematically measure its financial risk. But, its appeal is mainly its conceptual simplicity andits consistency across financial products and activities.