Market Risk Measurement

Market risk measurement involves assessing the potential for financial losses due to changes in market factors like interest rates, currency rates, or asset prices. It uses statistical tools and models to estimate the likelihood and extent of possible losses over a specific period. This helps businesses and investors understand their exposure to market fluctuations, so they can make informed decisions, manage their risks effectively, and set appropriate limits to protect their financial stability. Essentially, it's about quantifying potential future swings in value caused by market changes.