Value-at-Risk or VAR is a financial technique developed in the late 90s by JPMorgan. It is used to estimate the total possible loss for a day's activity within a financial firm. VAR is calculated using historical data on risk, volatility and price movements. The problem is that it ignores the extremes (assuming the performance has a normal distribution) and these tail-risks are the ones that can bankrupt an institution very quickly. For general day-to-day activities however, VAR is quite useful and accurate.
To learn more about this concept and become a master at Financial Statement modeling, you should check out our FSM Modeling Course. Learn more here.
Module 1: Getting Started
Module 2: Fundamental Concepts
Module 3: The Income Statement
Module 4: Working Capital
Module 5: PP&E and Intangibles
Module 6: The Cash Flow Statement
Module 7: Debt & Interest Schedule
Module 8: Finishing Your Model
Module 9: Bonus