It is a structured approach that uses measurable data and statistical methods to evaluate and manage risks based on their likelihood and potential impact in numerical terms. The distinction i draw between risk management and risk measurement argues for a subtle but important change in focus from the standard risk management approach In section 1.1 we begin with the nature of risk itself and discuss how risk relates to randomness In the financial context (which includes insurance) we summarize the main kinds of risks encountered and explain what it means to measure and manage such risks. It provides a foundation and explores key concepts relating to loss distribution, risk management, risk aggregation, and risk allocation principles. This underscores the importance of quantitative methods in financial risk management
Using mathematical models and statistical tools, institutions can enhance their ability to evaluate, quantify, and manage financial risks with heightened accuracy and effectiveness. Risk management versus risk measurement 1.1 Contrasting risk management and risk measurement 1.2 Redefinition and refocus for risk management 1.3 Quantitative measurement and a consistent framework 1.4 Learn how to set up a quantitative risk analysis that drives smarter risk prevention
