Ch 8: Strategic Decision Making & Risk Management

About This Chapter

To review the connections between strategic decision making and risk management, check out this series of fun and informative business lessons. The chapter can be used for a variety of purposes, including test preparation, homework help, tutoring, professional development and casual learning.

Strategic Decision Making & Risk Management - Chapter Summary

Work through this chapter at your own pace to explore the relationship between risk management and strategic decision making in business. Our short and expertly taught lessons lay out several methods of risk management, analysis and control, as well as the practical functions of bounded rationality, probability charts and the Monte Carlo simulation. You can access this chapter whenever you need to brush up on these concepts, and you can review the material on any Internet-connected device. Be sure to take the accompanying lesson quizzes and chapter exams to check your understanding of the information. When you're finished with the chapter, you should be able to:

  • Describe the ways in which managers make decisions based on certainty, uncertainty and risk
  • Recognize the applications of risk management and risk analysis in business
  • Differentiate between risk management and risk control
  • Outline the process of risk assessment
  • Evaluate the use of the bounded rationality model in decision making
  • Reduce risk by using probability charts
  • Discuss the uses of the Monte Carlo simulation in risk management
  • Explain how the need for risk management is driven by external environmental changes

8 Lessons in Chapter 8: Strategic Decision Making & Risk Management
Test your knowledge with a 30-question chapter practice test
Decision Making for Managers: Certainty, Risk & Uncertainty

1. Decision Making for Managers: Certainty, Risk & Uncertainty

Making decisions with the most amount of certainty is something managers learn to do over time. In this lesson, we will review how managers work with certainty and risk in order to make informed decisions.

Risk Analysis & Risk Management in Business: Overview, Objectives & Comparison

2. Risk Analysis & Risk Management in Business: Overview, Objectives & Comparison

A successful business requires careful attention to the allocation of resources and, just as important, to the degree to which those resources are exposed to risk. In this lesson, we'll discuss the importance of risk analysis and management in business.

Risk Control vs. Risk Management

3. Risk Control vs. Risk Management

In this lesson, we'll clarify the difference between risk management and risk control. We'll also describe a five step process commonly used in risk management, and then highlight four basic categories of risk controls.

What Is a Risk Assessment? - Process, Methods & Examples

4. What Is a Risk Assessment? - Process, Methods & Examples

What is a risk assessment, and why would we prepare one? In this lesson, we'll learn what it is, why it's needed, and how to prepare a risk assessment and rank potential risks for our business.

Bounded Rationality and Decision Making in Organizations

5. Bounded Rationality and Decision Making in Organizations

Managers have to make either intuitive or rational decisions every day. However, the rational decision-making process is not always an option. The bounded rationality model was developed to explain making rational choices under time constraints and other pressures.

Using Probability Charts for Risk Reduction

6. Using Probability Charts for Risk Reduction

All strategic decisions have risks associated with them, but not all risks are equal. This lesson outlines ways that decision-makers can systematically characterize risks in order to focus the right resources on the right risks.

Using the Monte Carlo Simulation in Risk Management

7. Using the Monte Carlo Simulation in Risk Management

In this lesson, students will learn how the Monte Carlo simulation enables testing of preliminary task estimates to help reduce project uncertainty and risk.

External Environmental Changes Drive the Need for Risk Management

8. External Environmental Changes Drive the Need for Risk Management

Businesses operate in a dynamic world where the only thing for certain is that things will change. Change can bring both risk and reward. In this lesson, you'll learn how change in the business environment drives the need for risk management.

Chapter Practice Exam
Test your knowledge of this chapter with a 30 question practice chapter exam.
Not Taken
Practice Final Exam
Test your knowledge of the entire course with a 50 question practice final exam.
Not Taken

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