Brownian motion

{
  "id": "MLC-T-INS-000624",
  "term": "Brownian motion",
  "field": "Insurance and risk management",
  "definition": "A stochastic process used to model the random path of a variable over time, characterized by continuous but non-differentiable paths. In financial and insurance risk modeling, it represents the unpredictable fluctuations of asset prices or interest rates, incorporating a drift for the expected trend and a volatility term for the magnitude of random changes. Geometric Brownian motion, an extension where the logarithm of the variable follows this process, is a foundational component of the Black-Scholes option pricing model.",
  "url": "https://mlchart.com/terminology/insurance/brownian-motion/"
}