Tail risk

The risk of adverse consequences from a 'tail event'.

Financial markets tend to have 'fat tails', meaning both the likelihood and the size of potential losses and other adverse consequences are systematically underestimated.

See also

• Bubble
• Fat tail
• Frequency distribution
• Leptokurtic frequency distribution
• Normal frequency distribution
• Procyclicality
• Standard deviation
• Tail event
• Tipping point