Decision and Risk Analysis
By David Hulett
Decision and Risk Analysis helps organizations make decisions to maximize their utility in the presence of risk and uncertainty. It helps them make a risk-informed decision. Included here are three documents. The first, presenting modern decision analysis methods, was written by Dr. Harry Saunders who is a Senior Associate of Hulett & Associates, LLC.
"Modern Decision Analysis Methods", describing the entire approach to developing alternative scenarios and evaluating them using tools and methods of decision analysis that have undergone highly practical improvements in the last few decades.
Uses of decision tree analysis for two types of organizations are shown in the other two papers:
"Use Decision Trees to Make Important Project Decisions", for the larger organization that may be risk-neutral, the approach is to maximize expected value, balancing rewards and costs with uncertainty.
"Decision Tree Analysis for the Risk-Averse Organization", for other organizations may be risk-averse. This means that they have a non-linear utility function, usually emphasizing avoiding negative outcomes, and maximizing expected utility, and maximize expected utility.