Asset Allocation & Risk

What is tail risk?

इस पृष्ठ का हिन्दी संस्करण तैयार हो रहा है। तब तक सामग्री अंग्रेज़ी में दिखाई जा रही है।

Tail risk is the risk of extreme events that are unlikely to occur but cause large losses when they do.

Many financial models assume that returns follow a normal distribution, but actual market returns tend to show 'fat tails', with extreme events occurring more often than such a distribution implies. Tail risk cannot be eliminated, but diversifying broadly across assets and strategies can soften the blow somewhat.

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This answer is general financial information as of 14/10/2026, not investment advice. Rules and tax rates change, so please also check the latest guidance from the source institution.