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Tail risk

\ teɪl \ rɪsk \

In statistical theory, tail risk is the risk of an extreme or unlikely event. 

A tail event is the occurrence of a such and extreme event. Technically, the event could have a positive or negative effect, but risk management practices tend only to focus on negative tail events, known as downside tail events.

A tail event is often defined as one with less than a 1 in 200 chance of happening. However, it is extremely difficult to calculate precise probabilities of such extreme events in practice.

In longevity terms, examples of potential tail events are a cure for aging or a severe climate event. Although, which one you view to be a downside tail event depends on your perspective.

Keep exploring our Lexicon of Longevity
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