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Risk Assessment Sensitivity analysis

Financial decision making requires assessment of risk. Select terms for each category below and then define it and provide an example.

2 Risk Assessment Behavioral Methods (ex. Sensitivity Analysis)

2 ways to quantitatively assess risk (ex. Standard Deviation)

3 risk management techniques (ex. Portfolio Management)

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The following will assist you further in your understanding of financial risk management. Today's economy is a perfect example of financial risk management. Madoff has brought many down.

Financial decision making requires assessment of risk. Select terms for each category below and then define it and provide an example.

1 Risk Assessment Behavioral Methods (ex. Sensitivity Analysis)

This assessment allows an individual and management how to analyze potential risks facing a situation or an organization. This assessment uses mitigating controls that assists organizations in how to manage risks. This method places a significant weight on an expected monetary impact and advises of what the probability of a certain risk can be. This assessment puts a certain behavioral method on the situation. In this case, sensitivity analysis.

Now that the risk assessment has been performed and the behavioral method has been identified, the sensitivity analysis begins. "Sensitivity analysis is used to determine how "sensitive" a model is to changes in the value of the parameters of the model and to changes in the structure of the model. Parameter sensitivity is usually performed as a series of tests in which the modeler sets different parameter values to see how a change in the parameter causes a change in the dynamic behavior of the stocks. By showing how the model behavior responds to changes in parameter values, sensitivity analysis is a useful tool in model building as well as in model evaluation." (Forrester 2001)

Example - let's ...

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The solution discusses Risk Assessment Behavioral Methods (ex. Sensitivity Analysis)

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