👉 Risk math involves quantifying and analyzing the potential financial losses or negative outcomes associated with uncertain events. It uses statistical methods to estimate the probability and impact of various risks, helping organizations make informed decisions by balancing potential gains against possible losses. This approach often includes calculating expected values, using metrics like Value at Risk (VaR) to estimate the maximum loss over a given time period with a certain confidence level, and stress testing scenarios to understand extreme outcomes. By doing so, risk math provides a structured way to manage and mitigate risks in business, finance, and other fields.
