Financial institutions in Taiwan use different methods to calculate the risk of their investments. A study tested three methods - historical simulation, Monte Carlo simulation, and variance-covariance - to see which one is the most accurate for predicting potential losses. The research found that historical simulation is the best method for estimating the value at risk in a portfolio that includes stocks, bonds, foreign exchange, and index options. This means that using historical data to predict future risks is the most reliable approach for financial institutions in Taiwan.