Hello, you have come here looking for the meaning of the word
tail risk. In DICTIOUS you will not only get to know all the dictionary meanings for the word
tail risk, but we will also tell you about its etymology, its characteristics and you will know how to say
tail risk in singular and plural. Everything you need to know about the word
tail risk you have here. The definition of the word
tail risk will help you to be more precise and correct when speaking or writing your texts. Knowing the definition of
tail risk, as well as those of other words, enriches your vocabulary and provides you with more and better linguistic resources.
English
Etymology
From statistics, namely referring to the end-portion ("tail") of distribution curves.
Noun
tail risk (plural tail risks)
- (chiefly finance) The probability that the value of something will fall more than three standard deviations below the mean
2004, Srichander Ramaswamy, Managing Credit Risk in Corporate Bond Portfolios, →ISBN, page 123:The advantage of performing a simulation is that different tail risk measures can be computed from the simulated loss distribution.
2011, International Monetary Fund, Capital Regulation and Tail Risk, →ISBN, page 4:Hence, under tail risk, excess risk-shifting incentives of bank shareholders may exist almost independently of the level of initial or required capital.
2012 April 20, Alan Gerstein, “The Challenges in Hedging Tail Risk”, in The New York Times:Given this backdrop and these fears, “tail risk” hedging, or protecting investment portfolios against extreme negative moves in the market, has been a frequent topic of conversation among market participants.
2013, Paul Karamjeet, Managing Extreme Financial Risk, →ISBN, page xxii:Not making this distinction between normal risk and extreme tail risk is often the reason institutions lack clear, highly focused goals and governance policies for the management of tail risk.
See also
- black swan (“a rare and hard-to-predict event with major consequences”)