EVT (Extreme Value Theory)

Extreme Value Theory (EVT) is a branch of statistics focused on understanding and modeling the occurrence of rare, extreme events—like floods, stock market crashes, or hurricanes. Instead of analyzing average behavior, EVT examines the tail ends of data distributions to predict the likelihood and size of these rare events. This helps organizations prepare for or mitigate risks associated with uncommon but potentially impactful occurrences by providing insights into their frequency and magnitude based on historical data.