Revolutionizing Risk Management: New Tools to Predict and Prevent Losses
The article discusses how to model and analyze operational risks using probability and statistical tools. It covers topics like basic probability concepts, measures of risk, and different models for estimating losses. The researchers also delve into extreme value theory for studying large losses and multivariate models for analyzing multiple risks together. The article provides methods for calibrating these models, including parameter estimation and model selection. Overall, the goal is to help understand and manage operational risks more effectively by using mathematical and statistical techniques.