| Term | Definition |
|---|
| Forecast | An estimate of some future value, amount, or quantity calculated by mathematical techniques or determined by intuition. |
| Price Index | The price of a particular basket of goods and services relative to some base year, when the price index for the base year is set to be 100. |
| Probability Analysis | A technique for forecasting events, such as accidental and business losses, on the assumption that they are are governed by an unchanging probability distribution. |
| Probability Distribution | A presentation (table, chart, or graph) of probability estimates of a particular set of circumstances and of the probability of each possible outcome. |
| Skewness | A measure of whether a probability distribution is symmetrical. |
| Symmetrical Distribution | A distribution that, when bisected by a vertical line, is identical on both sides. |
| Skewed | A distribution that is not symmetrical. |
| Central Tendency | The single outcome that is representative of all possible outcomes included within a probablity distribution. |
| Expected Value | The weighted average of all of the possible outcomes of a probability distribution. |
| Mean | The numeric average; calculated by summing all observed values and dividing by the number of observations. |
| Median | The midpoint of a sequential set of values. For an even number of values, the median is the average of the two middle values. |
| Mode | The most frequently occurring value in a distribution. |
| Dispersion | The variabilit, or scatter, among the values of a data set. |
| Standard Deviation | The average of the differences (deviations) between the possible outcomes and the expected values of those outcomes. |
| Coefficient of Variation | A measure of dispersion calculated by dividing a distribution's standard deviation by its mean. |
| Normal Distribution | A probability distribution that is symmetrical about the mean and that has proven useful in accurately foreecasting the variability of many physical phenomena. |
| Trend Analysis | An analysis that identifies patterns in past losses and then projects these patterns into the future. |
| Trend Line | A line on a graph indicating a pattern. |
| Regression Analysis | A statistical technique that is used to estimate relationships between variables. |
| Dependent Variable | The variable being forecast. |
| Independent Variable | The variable that determines the value of the variable being forecast. |
| Linear Regression Analysis | A form of regression analysis that assumes that the change in the dependent variable is constant for each unit of change in the independent variable. |
| Joint Probability | The probability that two or more events will happen together. |
| Conditional Probability | The likelihoode that an event will occur if it is certain that another event has occurred or will occur in a gtiven period. |
| Alternative Probability | The probability that any one of two of more events will occur within a given period. |
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