4 ms·

operational risk is usually not included in var.

• JumpCrisscross 13y ago
  You are correct - VaR is a measure of financial risk. I was using it as an analogy. Theft from one's hot wallet appears to be a common risk of Bitcoin businesses. Traders use VaR to quantify one of their own common risks, financial risk. Capital is then held against the risk. Bitcoin businesses should quantify and reserve against the risk of theft from their hot wallets. Part of this involves limiting the risk (thinly capitalising the hot wallet). Part involves holding reserves (in cold storage or U.S. dollars). That metric and reserve would not be VaR, just inspired by it.
• Ntrails 13y ago
  Operational risk is usually managed with risk limits, reporting, dashboards. Since it is difficult to model quantitatively VaR tends not to be very applicable - except as a concept. The 1 in 200 event. The concept of setting your risk limit at a non-lethal amount is completely valid. I don't know how bitcoin wallets work particularly, but simply having no more value stored in a hot wallet than can be tolerably lost (or a way of sharing that risk with users) in a single event seems reasonable. Then just work hard to prevent said loss since it destroys value.