What does VAR mean in 2010?

Value-at-risk figures fell across the industry in 2009, while exceptions dropped significantly from levels in 2007 and 2008. But discussion over what VAR figures actually show and how the numbers are interpreted by senior management continues. By Alexander Campbell

Stock market performance

A calmer year in in 2009 saw value-at-risk figures drop steadily at almost every major bank, but debate about exactly what the figures reveal – and how they are used – continues.

The numbers are generally seen as a proxy for risk appetite: the higher the VAR, the more aggressive the trading strategy. Post-crisis, that reading no longer seems watertight. As markets froze in 2007 and 2008, losses at many institutions burst through VAR limits on a more regular basis than had been thought possible

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