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Probability for Risk Management by Donald G. Stewart, Matthew J. Hassett

Probability for Risk Management Donald G. Stewart, Matthew J. Hassett ebook
Publisher: ACTEX Publications
ISBN: 156698548X, 9781566985482
Format: pdf
Page: 450

To implement a project successfully, you need to manage risks well. There is no easy way to predict the occurrence of low-probability, high impact events. One thing financial markets are good at is innovating and creating managers and hedge funds are the typical investors in cat bonds. For the issuer, they are not only a way to obtain more efficient and cheaper insurance against low probability, high impact events, but also to provide multi-year coverage. Building this understanding of the risk network allows management to focus early on the highly networked risks to improve the overall probability of the success of the program. This tool gives you a framework for prioritizing risks quickly and effectively. The following post is a part of a series that discusses 'managing risk for development,' the theme of the World Bank's upcoming World Development Report 2014. The traditional view of risk management plots the probability of an event from very low to very high on one axis, say the vertical, and the impact of that event from very low to very high on the horizontal axis. Risk managers need to avoid six key mistakes in order to change their ways of thinking about risks and to lessen their vulnerability to so-called “black swans. Hence, a probability-based risk management framework is the correct way to consider the link between climate change and extreme weather. The argument that “probability theory is at the heart of risk and uncertainty management” sounds logical and appropriate in layman terms.