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[19 Mar 2009 | Comments Off | ]

Risk, when does it occurs? Whenever the outcome of a situation is not 0 or 1 you have uncertainty. Investment decisions taken under these circumstances involve a probability for an outcome that will differ from your estimated target. Decisions taken under uncertainty are a reality and a constraint manager’s face. In order to reduce the risk (probability of gain/loss) you have basically two ways of doing it, reduce the exposure or try to reduce the uncertainty by gathering more information.