02.06 |【06】| Why distinguish between risk and uncertainty ?

⚠ Use of different approaches to deal with…

ℹ As risk is quantifiable, in an attempt to improve the reliability of business forecasts, appropriate sophisticated modelling techniques are essential to deal with it, for instance, use of…

1️⃣ Sensitivity Analysis⌖

2️⃣ Probabilities (ρ) and Expected Values (EV)⌖

3️⃣ Standard Deviation (σ)⌖

4️⃣ Monte Carlo Simulation⌖

5️⃣ Value at Risk (VaR)⌖

6️⃣ Pay-Off-Tables (POT)⌖

ℹ As uncertainty is unquantifiable, when probabilities are unknown — not available, there are still feasible techniques to incorporate uncertainty into decision making process, for instance, use of…

1️⃣ The Maximax rule⌖

2️⃣ The Maximin rule⌖

3️⃣ The Minimax Regret rule⌖