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A. Option B
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NEW QUESTION: 2
The generalized Pareto distribution, when used in the context of operational risk, is used to model:
A. Average losses
B. Expected losses
C. Tail events
D. Unexpected losses
Answer: C
Explanation:
Explanation
Some risk experts have suggested the use of extreme value theory to model tail risk or extreme events for operational risk. The generalized Pareto model or the Peaks-over-Threshold (POT) model are often used to model extreme value distributions, and therefore Choice 'a' is the correct answer.

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E. Rationale
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