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Im struggling somewhat with how to best understand and explain to clients the Value At Risk concept. Can you help me to better understand the Value At Risk figure and what it represents?

April 26, 2017best clients concept explain help risk somewhat struggling understand value

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Im struggling somewhat with how to best understand and explain to clients the Value At Risk concept. Can you help me to better understand the Value At Risk figure and what it represents?

1 Answer

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If you fill in 2.5% as the VaR level, then the One Year Value at Risk on the Current Portfolio sheet is an amount you might lose from that account 2.5% of the time. In any given year you might lose that amount or more 2.5% of the time.