Tail

The term tail refers to the portion of a financial distribution representing extreme or rare events. It describes the outcomes that occur on the fringes of a statistical distribution far from the average or most common values. In the context of risk management, the tail of a distribution is of particular interest because it encompasses events with low probability but high impacts, such as significant financial losses or unexpected market disruptions. These tail events are often called "fat tails" and are considered outliers compared to the more frequently observed outcomes.