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Risk class in finance
In finance, model risk is the risk of loss resulting from using insufficiently accurate models to make decisions, originally and frequently in the context
Model_risk
Modelling financial risks
Financial risk modeling is the use of formal mathematical and econometric techniques to measure, monitor and control the market risk, credit risk, and operational
Financial_risk_modeling
Risk that a borrower or counterparty fails to meet financial obligations
assessments of credit risk and may be used as a reference point to price loans or trigger collateral calls. Most lenders employ their models (credit scorecards)
Credit_risk
Computer security threat assessment model
Reproducibility, Exploitability, Affected users, Discoverability) is a risk assessment and threat modeling system for computer security threats. When a given threat
DREAD_(risk_assessment_model)
Model used in risk analysis
The Swiss cheese model of accident causation is a model used in risk analysis and risk management. It likens human systems to multiple slices of Swiss
Swiss_cheese_model
Finance model linking expected return to systematic risk
portfolio. The model takes into account the asset's sensitivity to non-diversifiable risk (also known as systematic risk or market risk), often represented
Capital_asset_pricing_model
Mathematical model of financial markets
the risk of the security and its expected return (instead replacing the security's expected return with the risk-neutral rate). The equation and model are
Black–Scholes_model
Any of various types of risk associated with financing
market risk, liquidity risk, credit risk, business risk and investment risk. The four standard market risk factors are equity risk, interest rate risk, currency
Financial_risk
Iranian mathematician (born 1972)
mathematical modelling in finance, in particular for his work on pathwise methods in stochastic analysis and mathematical models of systemic risk. He was awarded
Rama_Cont
Portfolio optimization model in finance
'move' exactly together, the HM model shows investors how to reduce their risk. The HM model is also called mean-variance model due to the fact that it is
Markowitz_model
Risk of collapse of an entire financial system or entire market
In finance, systemic risk is the risk of collapse of an entire financial system or entire market, as opposed to the risk associated with any one individual
Systemic_risk
Theory in actuarial science and applied probability
(sometimes risk theory or collective risk theory) uses mathematical models to describe an insurer's vulnerability to insolvency/ruin. In such models key quantities
Ruin_theory
Criminological risk assessment model
The risk-needs-responsivity (RNR) model is used in criminology to develop recommendations for how prisoners should be assessed based on the risk they present
Risk-need-responsivity_model
Concept in finance
investments or business adventures. A risk factor is a concept in finance theory such as the capital asset pricing model, arbitrage pricing theory and other
Risk_factor_(finance)
Protecting economic value by managing risk exposure
Financial risk management is the practice of protecting economic value in a firm by managing exposure to financial risk - principally credit risk and market
Financial_risk_management
American economist, educator, writer and investor
portal Kalotay–Williams–Fabozzi model "Frank Fabozzi, PhD". EDHEC-Risk Institute "Professor Frank J Fabozzi joins EDHEC-Risk Institute". HedgeWeek.com. Global
Frank_J._Fabozzi
Academic sub-field of risk management
change-related risks, cancer risks, and infectious disease risks. Within risk communication research, the risk information seeking & processing (RISP) model hypothesizes
Risk_communication
Risk arising from changes in market volatility affecting the value of financial positions
Financial risk management Implied volatility Volatility smile IVX Market risk Model risk § Uncertainty on volatility Volatility arbitrage Value at risk Volatility
Volatility_risk
Possibility of something bad happening
undiversifiable risk. The model implies this 'systematic' source of risk should be the only factor considered, as all other sources of risk can be diversified
Risk
Identification, evaluation and control of risks
Risk management is the identification, evaluation, and prioritization of risks, followed by the minimization, monitoring, and control of the impact or
Risk_management
Model that values credit risk using option-based default mechanics
The Merton model, is a widely used "structural" credit risk model, which was developed by American economist Robert C. Merton in 1974. Analysts and investors
Merton_model
American financial services company
The RiskMetrics variance model (also known as exponential smoother) was first established in 1989, when Sir Dennis Weatherstone, the new chairman of J
RiskMetrics
Measure of potential liquidity shortfall in a financial portfolio
like VaR, is sensitive to model assumptions and may underestimate extreme events. Liquidity at risk (LaR) is a quantitative risk measure that estimates the
Liquidity_at_risk
Modeling financial systems
Credit risk, Consumer credit risk, counterparty credit risk and regulatory capital: EAD, PD, LGD, PFE, EE; Jarrow–Turnbull model, Merton model, KMV model Portfolio
Financial_modeling
loss or gain). The risk inclination model (RIM) is composed of three constructs: confidence weighting, restricted context, and the risk inclination formula
Risk_inclination_model
Software development process model
The spiral model is a risk-driven software development process model. Based on the unique risk patterns of a given project, the spiral model guides a team
Spiral_model
Hypothesized risk to human existence
a serious risk of AI destroying humanity". Politico. Retrieved 19 September 2026. Barrett, Anthony M.; Baum, Seth D. (23 May 2016). "A model of pathways
Existential risk from artificial intelligence
Existential_risk_from_artificial_intelligence
Economics theory
In economics and finance, risk aversion is the tendency of people to prefer outcomes with low uncertainty to those outcomes with high uncertainty, even
Risk_aversion
Academic journal
Journal of Risk Model Validation is a bimonthly peer-reviewed academic journal focusing on the implementation and validation of risk models. It was established
The Journal of Risk Model Validation
The_Journal_of_Risk_Model_Validation
risk and downside risk separately provides much more useful information to investors than does only looking at the single Capital Asset Pricing Model
Upside_risk
Risk that financial assets are misstated due to uncertain or unreliable valuations
developed pricing models. Valuation errors can result for instance from missing consideration of risk factors, inaccurate modeling of risk factors, or inaccurate
Valuation_risk
Econometric analysis of financial risk
econometrics of risk is a specialized field within econometrics that focuses on the quantitative modeling and statistical analysis of risk in various economic
Econometrics_of_risk
Use of mathematical and statistical methods in finance
considerations regarding counterparty credit risk were incorporated into the modelling, previously performed in an entirely "risk neutral world", entailing three major
Quantitative analysis (finance)
Quantitative_analysis_(finance)
Mathematical framework for investment risk
risk vs expected return profile — i.e., if for that level of risk an alternative portfolio exists that has better expected returns. Under the model:
Modern_portfolio_theory
Estimate of the potential impact of market movements on a firm's earnings
techniques similar to those employed in Value at Risk (VaR) models. Financial institutions typically model changes in interest rates, foreign exchange rates
Earnings_at_risk
Vulnerability to significant events that affect aggregate outcomes
can decline. In economic modeling, model outcomes depend heavily on the nature of risk. Modelers often incorporate aggregate risk through shocks to endowments
Systematic_risk
Asset pricing models
manage portfolio risk. They are generally extensions of the single-factor capital asset pricing model (CAPM). The multifactor equity risk model was first developed
Multiple_factor_models
Hypothetical interest rate on a risk-free investment
sometimes seen as the risk-free rate of return in US dollars. As stated by Malcolm Kemp in chapter five of his book Market Consistency: Model Calibration in
Risk-free_rate
Stochastic model for the evolution of financial interest rates
describes interest rate movements as driven by only one source of market risk. The model can be used in the valuation of interest rate derivatives. It was introduced
Cox–Ingersoll–Ross_model
Reduced-form model for valuing credit-risky securities using default intensities
Jarrow–Turnbull model is a widely used "reduced-form" credit risk model. It was published in 1995 by Robert A. Jarrow and Stuart Turnbull. Under the model, which
Jarrow–Turnbull_model
Banking regulation framework
jump-to-default risk. (iii) A residual risk add-on, appended for other market risks not captured, such as gap risk and behavioural risk. Under the Internal Models approach
Basel_III
Statistical model for asset pricing in finance
Switzerland. Eugene Fama and Kenneth French also analysed models with local and global risk factors for four developed market regions (North America,
Fama–French three-factor model
Fama–French_three-factor_model
Estimated potential loss for an investment under a given set of conditions
Value at risk (VaR) is a measure of the risk of loss of investment/capital. It estimates how much a set of investments might lose (with a given probability)
Value_at_risk
Probability measure
using a linear (risk-neutral) utility in the payoff, assuming some known model for the payoff. This means that you try to find the risk-neutral measure
Risk-neutral_measure
United States regulatory framework
testing of a bank's capital structure on a quantitative basis via models. Model risk management guidance has been provided by the Federal Reserve and the
Comprehensive Capital Analysis and Review
Comprehensive_Capital_Analysis_and_Review
Type of mathematical model
than the threshold. The liability-threshold model is frequently employed in medicine and genetics to model risk factors contributing to disease. In a genetic
Threshold_model
Process of identifying structural vulnerabilities
Evaluation) method, an operations-centric threat modeling methodology, was introduced with a focus on organizational risk management. In 2004, Frank Swiderski and
Threat_model
Risks arising from movements in market variables
building. Systemic risk Cost risk Demand risk Valuation risk Risk modeling Risk attitude Modern portfolio theory Risk return ratio Financial risk management § Banking
Market_risk
Risk-sensitive foraging models help to explain the variance in foraging behaviour in animals. This model allows powerful predictions to be made about expected
Risk-sensitive foraging models
Risk-sensitive_foraging_models
Key risk indicators Risk management tools Financial risk modeling Country risk Model risk Political risk Valuation risk Moral hazard Reputational risk "Nature
Natural_risk
Type of machine learning model
A large language model (LLM) is an AI model (typically a neural network) trained on a vast amount of text for natural language processing tasks, especially
Large_language_model
Risk of the actual return being below the expected return
Downside risk was first modeled by Roy (1952), who assumed that an investor's goal was to minimize his/her risk. This mean-semivariance, or downside risk, model
Downside_risk
Concept in financial mathematics
accounting Risk management Risk metric - the abstract concept that a risk measure quantifies Risk return ratio RiskMetrics - a model for risk management
Risk_measure
Aviation risk-management model
The 5M model is a troubleshooting and risk-management model used for aviation safety. Based on T.P. Wright's original work on the man-machine-environment
5M_model
Overview of finance and finance-related topics
of goods or services Capital asset pricing model – Finance model linking expected return to systematic risk Cash flow – Movement of money into or out of
Outline_of_finance
Measure of excess
(The Risk Free Rate) + (The Beta of the Security) * (The Market Risk Premium) In this model, we use the implied risk premium (market return less risk-free
Risk_premium
Risk of disrupting business operations
of Operational Risk Key risk indicators Operational risk management Risk management Risk management tools Risk modeling Supply chain risk management Yasar
Operational_risk
Mathematical model of interest rates
describes interest rate movements as driven by only one source of market risk. The model can be used in the valuation of interest rate derivatives, and has
Vasicek_model
Coherent measure for value at risk
optimization, the concept of risk measure is used to quantify the risk involved in a random outcome or risk position. Many risk measures have hitherto been
Entropic_value_at_risk
Term in decision theory
In statistics and decision theory, kurtosis risk is the risk that results when a statistical model assumes the normal distribution, but is applied to observations
Kurtosis_risk
Economic model showing fair trading leads to inequality
redistribution, taxation, risk limits, and wealth-attained advantage can alter the unequal outcomes the model produces. Because the basic model produces extreme
Yard-sale_model
Model in mathematical finance
Heath-Jarrow-Morton model (working paper). Berkeley: BARRA Inc. Chibane, M. and Law, D. (2013). A quadratic volatility Cheyette model, Risk.net v t e
Cheyette_model
Mark to market Model risk Gastineau et al., The Dictionary of Financial Risk Management Justin Wheatley, The StatPro Cloud "Mark to Model or Mark to Myth
Mark_to_model
Danger remaining after risk reduction
residual risk is residual risk = ( inherent risk ) − ( impact of risk controls ) {\displaystyle {\text{residual risk}}=({\text{inherent risk}})-({\text{impact
Residual_risk
Financial model
under a risk-neutral pricing measure and that the option payoff is discounted at a constant risk-free interest rate. In its standard form the model is used
Black_model
Icelandic economist
systemic risk, artificial intelligence, cryptocurrencies, financial risk, hedge funds, financial regulations, market volatility, liquidity, models of extreme
Jon_Danielsson
Variable associated with an increased risk of disease or infection
In epidemiology, a risk factor or determinant is a variable associated with an increased risk of disease or infection. Due to a lack of harmonization across
Risk_factor
Computer-assisted risk analysis
catastrophic event such as a hurricane or earthquake. Cat modeling is especially applicable to analyzing risks in the insurance industry and is at the confluence
Catastrophe_modeling
How equities and debt instruments are valued
Bollerslev (2019). "Risk and Return in Equilibrium: The Capital Asset Pricing Model (CAPM)" Andreas Krause. "An Overview of Asset Pricing Models" (PDF). people
Asset_pricing
Type of large language model
web pages. Citing risks of malicious use, OpenAI opted for a "staged release", initially publishing smaller versions of the model before releasing the
Generative pre-trained transformer
Generative_pre-trained_transformer
Economic model for asset prices
Bachelier model took an important role in option pricing and risk management. The CME Group has since switched back to the Black–Scholes model. Research
Bachelier_model
Type of risk an organization is willing to pursue
one possible qualitative model of risk appetites (that is, risk levels) that a business may adopt to ensure a response to risk that is proportionate given
Risk_appetite
Main model used in radioprotection to minimize radiation exposures
LNT model." The United States Environmental Protection Agency endorses the LNT model in its 2011 report on radiogenic cancer risk: Underlying the risk models
Linear_no-threshold_model
Financial modeling term
Skewness risk in forecasting models utilized in the financial field is the risk that results when observations are not spread symmetrically around an average
Skewness_risk
Income statement with commentary
incomplete, or the models used for sensitivities calculations are incorrect or inconsistent. See model risk and, again, Financial risk management § Banking
PnL_explained
The Financial Modelers' Manifesto was a proposal for more responsibility in risk management and quantitative finance written by financial engineers Emanuel
Financial_Modelers'_Manifesto
Protocol for communicating between LLMs and applications
The Model Context Protocol (MCP) is an open standard and open-source framework introduced by Anthropic in November 2024 to standardize the way artificial
Model_Context_Protocol
Concept in economics
theoretical models this often has the implication that decision-making is unaffected by scale. For instance, in the standard model of one risk-free asset
Isoelastic_utility
Security Risk Analysis Model (MSRAM) is a process and model that supports the U.S. Coast Guard's mission to understand and mitigate the risk of terrorist
Maritime Security Risk Analysis Model
Maritime_Security_Risk_Analysis_Model
Investment model
management (GSAM) factor model is a quantitative investment model used by financial analysts to assess the potential performance and risk of company. There are
Goldman Sachs asset management factor model
Goldman_Sachs_asset_management_factor_model
Probability of adverse effects of political decisions
modelled like other types of risk. For example, Eurasia Group produces a political risk index which incorporates four distinct categories of sub-risk
Political_risk
(concerned with mathematical modeling of financial markets), the entropic risk measure is a risk measure which depends on the risk aversion of the user through
Entropic_risk_measure
Risk measure estimating the average loss in the worst tail of the distribution
mathematical finance, risk measures arise when considering the profit/loss distribution, i.e., payoff, for a financial portfolio, modeled as a random variable
Expected_shortfall
theory, hyperbolic absolute risk aversion (HARA) refers to a type of risk aversion that is particularly convenient to model mathematically and to obtain
Hyperbolic absolute risk aversion
Hyperbolic_absolute_risk_aversion
Student who requires temporary or ongoing intervention
are predictable with linear modeling. In January 2020, Governor Gavin Newsom of California changed all references to "at-risk" to "at-promise" in the California
At-risk_students
Regulatory rating system to classify a bank's soundness
Risk: Interagency Advisory on Interest Rate Risk Management". www.OCC.gov. January 8, 2010. Retrieved June 22, 2017. "Sound Practices for Model Risk Management:
CAMELS_rating_system
Estimation of risk associated with exposure to a given set of hazards
ecological risk assessment: using the relative risk model. Boca Raton, FL: CRC Press. ISBN 1-56670-655-6. OCLC 74274833. Lackey R (1997). "If ecological risk assessment
Risk_assessment
Flood Modeller is a computer program developed by Jacobs that assesses flood risk by simulating the flow of water through river channels, urban drainage
Flood_Modeller
Type of financial risk
Foreign exchange risk (also known as FX risk, exchange rate risk or currency risk) is a financial risk that exists when a financial transaction is denominated
Foreign_exchange_risk
Equity risk is "the financial risk involved in holding equity in a particular investment." Equity risk is a type of market risk that applies to investing
Equity_risk
Trading modality
systematic trading funds, the high level of volatility and manager-specific model risk can be mitigated. Perry J. Kaufman, American systematic trader, index
Systematic_trading
Risk of statistically extreme events
Tail risk, sometimes called "fat tail risk", is the financial risk of an asset or portfolio of assets moving more than three standard deviations from
Tail_risk
optimization can be implemented using a two-moment decision model. Example 3: Suppose that a price-taking, risk-averse firm must commit to producing a quantity of
Two-moment_decision_model
Model in finance
In finance, the Heston model, named after Steven L. Heston, is a mathematical model that describes the evolution of the volatility of an underlying asset
Heston_model
EU AI governance framework
systemic-risk GPAI model in the EU market, or substantially updating an existing one. Signatories commit to identifying systemic risks of their model, analysing
General-Purpose AI Code of Practice
General-Purpose_AI_Code_of_Practice
Mathematical model in optimal trade execution
The Almgren–Chriss model is a mathematical model in mathematical finance for the optimal execution of large portfolio transactions. Developed by Robert
Almgren–Chriss_model
Classification of land resources based on what can be built and on its use
include land cover monitoring and assessments, modeling risk and vulnerability, and land change modeling. The IPCC defines the term land use as the "total
Land_use
Measure of the decline from a historical peak
(September 4), 2003 Eckholdt, H., "Risk Management: Using SAS to Model Portfolio Drawdown, Recovery and Value at Risk" (February), 2004. [What journal was
Drawdown_(economics)
Risk of investing or lending in a country
agencies tend to use quantitative econometric models and focus on financial analysis, whereas political risk providers tend to use qualitative methods, focusing
Country_risk
American financial economist (born 1946)
fields including business and finance. In his analysis of the impact of model risk on the valuation of barrier options, he highlighted the divergent pricing
Dilip_Madan
travel, tourism, insurance
MODEL RISK
MODEL RISK
MODEL RISK
MODEL RISK
MODEL RISK
MODEL RISK
MODEL RISK
MODEL RISK
MODEL RISK
travel, tourism, insurance