optimizing uncertainty in complex industry environment

Aradhana PandeySaumya Triapthi

Pay For Mistake :-Current crisis has imposed organization to improve their effectiveness of risk management. It is a time when organization cannot adopt “pay for mistake” , which is commonly adopted by most of the organizations in golden days of Economy.

Negative Outcome Approach:-The existing methods use the probability of a negative outcome to represent risk. Current representation of risk covers only one subcomponent of risk (i.e., the probability of a negative outcome) and leaves out another important subcomponent (i.e., the level of uncertainty concerning whether the outcome will be positive or negative).

Generic Solutions of existing Methods:-How to estimate the probability of a threat’s occurrence and the overall ISS risk, existing methods only provide general suggestions.

Events can be represented in both forms either positive or negative. Events with positive impact reflects opportunity & events with negative impact represents risk. This opportunity and risk can be framed into gain frame & loss frame. Decision makers base their verdict depending upon the frames and accordingly they select appropriate controls for risk avoidance and its mitigation .

But, variance in actual outcome from expected outcome of an event can create a new set of challenges for the organization. In this project , we are attempting to propose a model that will optimize and reduce the Uncertainty.

Specification of the Model Structure(Eventual Diagram)

Assessment of the proposed model Determination of the Uncertainty and the

overall risk Realization of the Hypothesis- Management

tool- Questionnaire & Polling

EVENTS

PROFITABLE EVENT REFLECTS

OPPORTUNITY

NON-PROFITABLE EVENT REPRESENTS

RISKUNCERTANITY

EVENTUAL REASONING MODEL

After having a thorough understanding of different risk assessment approaches, we have tried to analyze the non-centered part of risk i.e. UNCERTANITY.

Uncertainty=1-(Probability of Gain Frame + Probability of Loss Frame)

Hypothesis

Whether Uncertainty Affects Business Decisions

THANK YOU!!!