Question

The Risk Management Plan:

Why is it important to have a Risk Management Plan? What is included in the Risk Management Plan? Provide an outline of topics for a risk management plan. You can use this to work though your final project.

Decision Analysis:

Why is decision analysis used? What is the purpose of calculating the Expected Monetary Value of a decision? Why do you think the method of decision analysis is not frequently used?

Answer 1

It is important to have risk management because of following reasons-

1. It improves efficiency and consistency of business’s operations

2. It leads to more satisfied customers

3. Helps in boosting company’s bottom line

4. It protect resources of the business

5. It gives better opportunity for the brands of the company

6. It helps businesses in order to determine their future risks

7. It provides a means for better decision making in order to avoid future risks

8. It helps businesses to be financially prepared when problem arises

9. It improve a company’s brand image

10. It can help a company to discover reusable information

Following things are included in risk management plan-

1. Activities of risk identification

2. Risk assessment activities

3. Planning for newly identified risks

4. Monitoring trigger conditions

5. Contingency plans

6. Risk reporting on a regular basis

Decision analysis is used to assess decisions which are made in the context of multiple variable and that may have many possible outcomes or objectives. It is used to make decisions related to risk management, capital investment and strategic business decisions.

The purpose of calculating the expected monetary value of a decision is that it provides each chance node with the expected monetary impact of the uncertainty on the business. It helps to make a more informed overall decision. Expected monetary value of a decision used to quantify risks of the businesses and calculate the contingency reserves for future risks, which will help in better and efficient decision making.

The method of decision analysis is not used frequently because of its over-thinking nature. The decider over-think about the situation to the point that no decision can be made and this type of decision analysis is not often utilized.

"If you like my answer please give thumbs up, thank you".