## MARKET RISK

Market risk is the probability that the value of a financial asset, traded on a sufficiently liquid markets, changes due to not predictable factors. These factors can be linked to the uncertainty connected to some financial indicators such as the interest rates (e.g. EURIBOR and LIBOR), the spread between risky and risk-free government bonds, exchange rates, and real indicators like inflation or unemployment rates.

Typically, risk market evaluation aims to quantify the unexpected loss for a financial asset, by using ad hoc models (e.g., value at risk (VaR) (Encyclopedia)). These models quantify the maximum potential loss, to which a confidence interval applies, that can be generated by the above-mentioned market factors over a given time horizon.