Extreme Value Theory (EVT) is a statistical approach used to analyze the behavior of extreme events, such as floods, earthquakes, or stock market crashes. It helps in understanding the probability and potential impact of rare occurrences that lie far from the average. By focusing on the maximum or minimum values in a dataset, EVT provides insights into the likelihood of these extreme outcomes. The theory is based on the idea that extreme values can be modeled using specific probability distributions, such as the Gumbel, Fréchet, or Weibull distributions. These models allow researchers and analysts to estimate the risk associated with extreme events, aiding in decision-making for fields like finance, environmental science, and engineering.