Past Conference

Introduction - Climate Change and Extreme Events: Managing Tail Risks

About the Event

Managing Tail Risks

IntroductionEducational Materials Data Project Output
Ice Sheets on the Move

This webpage grew out of a workshop held at RFF in February 2010, organized by Roger Cooke and Carolyn The term “tail risk” refers loosely to the risk of extreme events in the far right-hand tail of a damage distribution, such as damages from hurricanes, terrorism, or climate change broadly. Kousky, entitled “Climate Change and Extreme Events: Managing Tail Risks.”

Two aspects of tail risk are particularly critical for risk managers: fat tails and tail dependence. With fat tails, the probability of an extreme event declines slowly, relative to severity. Tail dependence is the propensity of bad things to happen together. For distributions with severe tail risks, historical data may be unreliable, naïve loss estimates may be underestimates, and traditional diversification strategies may fail.

Work on tail risks is ongoing in the private sector, in government, and in academia across a range of disciplines including economics, mathematics, law, psychology, a range of natural sciences, and others. This diversity of methods, approaches, and backgrounds is evident in the material on this site. Cross-sector and cross-disciplinary research on these topics can be quite fruitful and the goal of this and related pages is to help push such collaborations forward.

These webpages contain research papers, educational materials, and public data sets relevant to managing tail risks. They also contain the presentations from the February workshop. There is a heavy focus on tail risks associated with climate change, but, of course, tail risks are critical in many other areas as well, such as national security and finance, and there may be some material on these other areas.

This material is based upon work supported by the National Science Foundation under Grant No. 0960865. Any opinions, findings and conclusions or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of the National Science Foundation (NSF).