Risk Management Stack Flashcards
What is needed to attain risk measurement?
Accurate modeling
Prediction
Concrete statement about what will and will not happen.
Statement of probability
Relative likelihood of a given outcome.
Does FAIR use prediction or probabilities?
Probabilities.
Making probabilistic statements about what might happen.
Probable vs. possible
FAIR cares about probable. Anything is possible but not probable.
Subjective vs. Objective
Subjective is based on feelings. Objective is based on data (as much as reasonably available).
Subjectivity can never be eliminated.
Accuracy vs. Precision
Better to give accurate range than a precise range that could be wrong.
How accurate should estimates be?
Accurate with a useful level of precision.