Risk analysis

Any enterprise, business, campaign presumes the existence of certain risks that may affect the final result of their conduct. Implementation of the business strategy involves changing the rights, obligations and obligations of entrepreneurs, possible occurrences of unintended and unused processes, and other consequences.

To correctly choose a set of actions to achieve the result of the activity, it is necessary to take into account the possible impact of side effects so that the intended event does not lose its meaning. Any tactical (strategic) scheme must be subjected to risk analysis before the application in order to minimize the latter.

The risk analysis of an enterprise (company) begins with their evaluation. To do this, it is necessary to choose an evaluation methodology that must meet the safety requirements of a certain type of activity and the legal regulators of this activity.

Risk analysis requires the use of accessible information in order to assess the probability of occurrence of certain events and the possible scale of their consequences.

As a rule, risks are understood as negative events and circumstances, for example, losses when conducting a venture venture, natural disasters with serious consequences, etc. Nevertheless, risk analysis helps to identify their potential positive consequences. It is necessary to identify future problems and assess development prospects.

Risk analysis is carried out on a quantitative and qualitative level (risk analysis methods are selected individually).

In quantitative analysis, the studied phenomena are assigned numerical (quantitative) values, empirical data is used. At this level, the analysis is extremely objective and accurate (for this method) character.

Qualitative analysis includes an internal (instinctive) assessment of emerging circumstances. At this level, subjectivity and related doubts are allowed.

Comparing these two levels of analysis, it is necessary to dwell in more detail on the quantitative. It can be done in different ways.

Point determinations are used in the deterministic approach. In order to understand what can be the results in individual cases, different events are assigned certain values. For example, in the financial model, you can consider such options: the worst (future losses), the best (future profits) and the most likely (moderate, relative profit).

In this case, the method has a number of drawbacks: it does not take into account many possible scenarios, but concentrates only on a few basic versions (all of which are considered to be equivalent); Insufficient consideration is given to factors that may affect the development of the situation, which leads to a simplification of the model. However, very many enterprises use this approach, in spite of the relatively low reliability of the results of such an analysis.

Stochastic risk analysis (the Monte Carlo method) is more reliable. With this approach, the initial parameters are represented as ranges of values (produce a probability distribution). In this case, different variables have different probability of occurrence of consequences. Values are chosen randomly, based on possible probability distributions.

Samples are called iterations. The results of the samples are recorded. To perform the simulation, the sampling procedure is repeated hundreds of times, so such results are much more fully capable of revealing the probability of occurrence of the expected events. The data of such modeling are able to demonstrate not only future events, but also to show the probability of their occurrence. The results can be represented graphically, as well as reflect their sensitivity, that is, to show which of the variables most affected the result. Using this method, it is also possible to show the relationships between the initial variables.

It is most convenient to carry out a quantitative risk analysis based on Excel spreadsheets, because the tools of this program allow you to add new functions to get the opportunity to distribute the probabilities and get the most accurate results.