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How do businesses manage risk or uncertainty? For example, they don't know how many customers will...

How do businesses manage risk or uncertainty? For example, they don't know how many customers will buy in a period. A storm, a competing product, or a unfavorable news story can affect sales.

Math   Statistics-And-Probability   
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Answer #1

In decision making, uncertainty refers to unknown or uncertain outcomes of decisions whereas risk refers to outcomes that are probabilistic in nature.

To deal with uncertainty in decision-making in a business setting it is important to identify the areas of uncertainty . Determine which uncertainties could have the greatest impact on the outcome of your decision. Reduce key uncertainties to the extent that you have the time and resources to do so.

In Decision Making under Risk, we have some probabilistic information regarding the states of nature and based on this information we find the expected outcomes of each decision .

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