VaR: The state of play

Neil D. Pearson, Charles Smithson

Research output: Contribution to journalArticlepeer-review

Abstract

Since "Value at Risk" (VaR) received its first wide introduction in the July 1993 Group of Thirty report, the number of users of-and uses for-VaR have increased dramatically. However, VaR itself has been evolving. In this article, we will first review some of the important refinements in VaR that have appeared-improved speed of computation, improved accuracy, and improved stress testing. We then look at the "next steps" (which we refer to as "Beyond VaR"), in which we review extensions to standard VaR, the emergence of "risk contribution" measures, and alternatives to standard VaR (including Extreme Value Theory [EVT] and Coherent Risk Measures).

Original languageEnglish (US)
Pages (from-to)175-189
Number of pages15
JournalReview of Financial Economics
Volume11
Issue number3
DOIs
StatePublished - 2002

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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