Value at risk (VAR)

“What is the most I can lose on this investment?” This is a question that almost every investor who has invested or is considering investing in a risky asset asks at some point in time. Value at Risk tries to provide an answer, at least within a reasonable bound.
In fact, it is misleading to consider Value at Risk, or VaR as it is widely known, to be an alternative to risk adjusted value and probabilistic approaches.