Possible Solutions - Hypothesis - Dealing with uncertainty in your analysis
3 important questions on Possible Solutions - Hypothesis - Dealing with uncertainty in your analysis
Why is there uncertainty in an analysis?
Because we have an imperfect understanding of our environment and future.
What are 2 techniques that consultants may use for dealing with uncertainty?
- Build scenarios - chart the key uncertainties that face the client, identify the main drivers of uncertainties, develop alternative scenarios for the future.
- Conduct sensitivity analysis - assessing the impact of uncertainty on their solution.
There are 4 solutions that deal with uncertainty, which 4 are these and how do they deal?
- Contingency planning - create back-up scenarios following events
- Hedging - following portfolio theory compensate high-risk with low-risk scenarios
- Stage gates - staged investment plan (start small, increase when risk drops)
- Purchase/set up real options - small start-up investments allow for scale-up once future scenario become real
The question on the page originate from the summary of the following study material:
- A unique study and practice tool
- Never study anything twice again
- Get the grades you hope for
- 100% sure, 100% understanding
Remember faster, study better. Scientifically proven.
