# Poisson Distribution

*Math & Statistics — Finicade finance glossary*

The Poisson distribution gives the probability of a number of events in a fixed interval when they occur independently at a constant average rate. Its defining feature is that mean and variance are equal, which makes it the natural model for rare events: operational-loss counts, defaults in a portfolio, claims arriving at an insurer. Real data is often overdispersed relative to it, because events cluster.

**Also known as:** Poisson, rare event distribution

**Related terms:** [Poisson Process](https://finicade.com/glossary/poisson-process), [Probability Distribution](https://finicade.com/glossary/probability-distribution), [Binomial Distribution](https://finicade.com/glossary/binomial-distribution), [Operational Risk](https://finicade.com/glossary/operational-risk), [Expected Value](https://finicade.com/glossary/expected-value)

Source: https://finicade.com/glossary/poisson-distribution