📝 One-liners · 66 cards
Simulation
What is simulation in the context of banking risk management?
Simulation is a technique that uses mathematical models to imitate real-world processes or systems over time, allowing banks to analyze risk scenarios without real-world consequences.
What is discrete event simulation used for in banking operations?
Modeling banking processes where events occur at distinct time points
What is Monte Carlo simulation and how is it used in banking?
Monte Carlo simulation uses random sampling and statistical modeling to estimate mathematical functions and mimic the operations of complex systems; banks use it to model credit risk, market risk, and portfolio outcomes.
What is the Monte Carlo simulation's minimum recommended number of trials for reliable VaR?
At least 10,000 trials for statistically reliable Value at Risk
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