Risk Measures

Risk measures are tools used to quantify and assess the potential for loss or negative outcomes in various situations, like finance or safety. Common examples include standard deviation, which indicates variability or uncertainty, and Value at Risk (VaR), which estimates the maximum expected loss over a defined period. Other measures consider the likelihood of different outcomes, helping individuals and organizations make informed decisions by comparing potential risks against expected benefits. Essentially, risk measures provide a clearer picture of what could go wrong, allowing better planning and management of uncertainties.