Business executives often have to make major decisions without knowing exactly how they will turn out. Many factors, all of them well beyond their control, can affect the outcome of those decisions. To do a good job on these “big bet” decisions, executives must base their actions on the best available information, solid reasoning, and clear thinking. This paper by Dr. Steven N. Tani explores how executives can best deal with the uncertainty and risk inherent in their decisions.
Tool to Calculate the Risk-Adjusted Value of an Uncertain Venture
The user-defined function in this workbook calculates the risk-adjusted value of an uncertain venture given two input parameters: 1) Quantified Risk Appetite (QRA), also known as risk tolerance, and 2) a table of values and corresponding probabilities specifying the uncertain venture.
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