... The business executive is by profession a decision maker. Uncertainty is his opponent. Overcoming it is his mission ...

What is Decision & Risk Analysis ?

D.& R.A. is a disciplined approach to decisions involving several uncertainties which helps to :

• Develop distinctively different strategies;
• Recognize and communicate key uncertainties underlying business decisions;
• Concentrate analytical effort on what needs to be learned as distinguished from further refinement of what is already known;
• Determine when it is time to stop analyzing and make a decision

This is a powerful tool for a broad range of business decisions including overall strategies, proposed plant investments, R&D programs, environmental assessments, etc. The key steps are :

• STRUCTURING PHASE
• Develop alternative courses of action
• Define key uncertainties
• ANALYSIS PHASE
• Assess uncertainties
• Model decisions and uncertainties
• Perform sensitivity analysis to isolate critical variables
• Determine the value of additional information
• ACTION PHASE
• Recommend best strategy/tactics for maximizing value
• Identify resources and time needed to execute recommendations
• Post-audit

Benefits of the D.& R.A. process

• Create a broad range of strategies for your business;
• Increase your understanding of which uncertainties will most affect business results or the outcome of a specific decision;
• Make effective decisions in a way that involve team members and clearly communicates results to upper management;
• Identify key steps for success (road map) and monitor results versus expectations on a continuing basis.

D.& R.A. process : interactions between "Core Study Team" and "Decision Review Board" : Framing, Alternatives, Analysis, Conclusions.

D.& R.A. tools : Decision Hierarchy, Influence Diagram, Strategy Table, Sensitivity Analysis

• Framing the problem
• Skeleton decision tree
• Influence diagram
• Estimating ranges of uncertainty
• Sensitivity analysis
• Decision tree evaluation

The greatest value of D.& R.A. flows from commitment to the process, not solely from use of the tools.