RESEARCH ARTICLES | RISK + CRYSTAL BALL + ANALYTICS

Prof Frank H Knight (1921) proposed that "risk" is randomness with knowable probabilities, and "uncertainty" is randomness with unknowable probabilities. However, risk and uncertainty both share features with randomness. The illustration below explains the relationship of the concepts better than words...

Source: Knight, F H (2002/1921), Risk, Uncertainty and Profit, Washington, DC: BeardBooks.

 

  • 1 June 2010
  • Author: mckibbinusa
  • Number of views: 1218
  • Comments: 0

Prof Frank H Knight (1921) proposed that "risk" is randomness with knowable probabilities, and "uncertainty" is randomness with unknowable probabilities. However, risk and uncertainty both share features with randomness. The illustration below explains the relationship of the concepts better than words...

Source: Knight, F H (2002/1921), Risk, Uncertainty and Profit, Washington, DC: BeardBooks.

 

 Quick overview of the parts of an optimization model in MS Excel.

  • 12 May 2009
  • Author: mckibbinusa
  • Number of views: 1101
  • Comments: 0

 Quick overview of the parts of an optimization model in MS Excel.

When using tools such as Excel, Crystal Ball or ModelRisk, it is very important to be able to translate a mental model to a mathematical one. Let me illustrate, when you think about your business, you often will think of abstract notions such as profit or margins. These are mental constructs because their are no physical representations of profit or margins (except a pile of cash) only mathematical ones.

  • 17 February 2009
  • Author: mckibbinusa
  • Number of views: 1021
  • Comments: 0
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