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Risk & uncertainty

From its inception, Analytica was designed to analyze risk and uncertainty — unlike spreadsheet applications which require special add-ins. Analytica’s fully integrated features for sensitivity analysis, scenario analysis and Monte Carlo simulation make it remarkably simple to treat risk and uncertainty in your models. Here are some examples of how organizations are using these methods.

A quote by Donald Rumsfeld. There are known knowns. These things we know that we know. There are known unknowns. This is to say, there are things that we know we don’t know. But there are also unknown unkowns. These are the things we don’t know we don’t know.

Finding out what you don’t know with sensitivity analysis

Remember Donald Rumsfeld’s speech from 2007 on the things we know and the things we don’t? How about some uncertainty or importance analysis to go with that?

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5 mistakes to avoid if you want to make good quantitative risk assessments

Numbers don’t lie. It’s the people using them that are responsible for falsehoods, distortions, or simply mistakes! Yet numbers have several attractions: you can compare them ...

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Estimation of mutual information

A measure of association is a function that rates the strength of statistical dependence between two variables. In casual talk, people often express this idea by asserting that ...

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Never tell me the odds?

In my last post, I discussed the meaning of expected value (EV) and how it’s useful for comparing the values of choices we could make when the outcomes we face with each choice ...

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A brief explanation of expected value

When helping people analyze the risks they face in complex decisions, I frequently receive requests for an explanation of expected value, as expected value is a measure commonly ...

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Fear and loathing in Las Vegas with Reverend Bayes

A trip to Vegas, an evil clown, a bizarre coin, and a minister. "What could go wrong?" I commented in a footnote of an earlier post that one of my favorite – no, morally obligated ...

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Desperately diving for pearls of great price

You would be shocked to learn how fast you can make it to the bottom of a lake with a cinder block tied to your leg. I know this rate, by my own empirical investigation, to be ...

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Do risk analysts dream of electron microscopes?

From as early as I can remember, I have always wanted to be a scientist. Indeed, while most kids my age were doing normal, healthy kid things on summer afternoons, like engaging ...

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