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That is, if portfolio always has better values than portfolio under almost all scenarios then the risk of should be less than the risk of . [2] E.g. If is an in the money call option (or otherwise) on a stock, and is also an in the money call option with a lower strike price.
A risk measure is defined as a mapping from a set of random variables to the real numbers. This set of random variables represents portfolio returns. The common notation for a risk measure associated with a random variable X {\displaystyle X} is ρ ( X ) {\displaystyle \rho (X)} .
The risk difference (RD), excess risk, or attributable risk [1] is the difference between the risk of an outcome in the exposed group and the unexposed group. It is computed as I e − I u {\displaystyle I_{e}-I_{u}} , where I e {\displaystyle I_{e}} is the incidence in the exposed group, and I u {\displaystyle I_{u}} is the incidence in the ...
In machine learning, specifically empirical risk minimization, MSE may refer to the empirical risk (the average loss on an observed data set), as an estimate of the true MSE (the true risk: the average loss on the actual population distribution). The MSE is a measure of the quality of an estimator.
The term 'risk transfer' is often used in place of risk-sharing in the mistaken belief that you can transfer a risk to a third party through insurance or outsourcing. In practice, if the insurance company or contractor go bankrupt or end up in court, the original risk is likely to still revert to the first party.
A dynamic risk measure is a risk measure that deals with the question of how evaluations of risk at different times are related. It can be interpreted as a sequence of conditional risk measures. [1] A different approach to dynamic risk measurement has been suggested by Novak. [2]
One point of possible objection interests the uncertainties associated with a PSA. The PSA (Probabilistic Safety Assessment) has often no associated uncertainty, though in metrology any measure shall be related to a secondary measurement uncertainty, and in the same way any mean frequency number for a random variable shall be examined with the dispersion inside the set of data.
In this context, risk is the combination of the frequency (likelihood) and the consequence of a specified hazardous event. Several factors are likely to be considered when deciding whether or not a risk has been reduced as far as reasonably practicable: [3] [4]