How To Fix TE425 - Historical period / Confidence level too low, VaR = 0

TE425 - Overview

• Message type: E = Error

• Message class: TE - Market Risk Management

• Message number: 425

• Message text: Historical period / Confidence level too low, VaR = 0

What causes this issue?

While using the VAR algorithm 2 (VAR from absolute profit/loss) or the
VAR algorithm 4 (VAR from absolute profit/loss with a doubling of
measured values), a small historical time period and a low confidence
level can lead to the case that no VAR in the true sense of the word
can be calculated. In this case the VAR is equal to 0.

System Response

The system issues an error message and will not allow you to continue with this transaction until the error is resolved.

How to fix this error?

Error message extract from SAP system. Copyright SAP SE.

Smart SAP Assistant

• What is the cause and solution for SAP error message TE425 - Historical period / Confidence level too low, VaR = 0 ?

  The SAP error message TE425, which states "Historical period / Confidence level too low, VaR = 0," typically occurs in the context of Value at Risk (VaR) calculations within SAP's Risk Management module. This error indicates that the parameters set for the historical period or confidence level are not appropriate for generating a valid VaR result, leading to a calculated VaR of zero.
  Causes:
  
  
  Insufficient Historical Data: The historical period selected may not have enough data points to calculate a meaningful VaR. For example, if the historical period is too short, there may not be enough variability in the data.
  
  
  Low Confidence Level: The confidence level set for the VaR calculation may be too low, which can lead to a situation where the calculated risk is effectively zero.
  
  
  Data Quality Issues: There may be issues with the underlying data, such as missing values or outliers, which can affect the calculation.
  
  
  Incorrect Configuration: The settings for