Although an increasing number of companies use decision and risk management methods to deal with complex and uncertain decisions, most still underperform according to typical business metrics and are unable to deliver the value they had estimated. Uncertainty per se is not the culprit; rather, it is a failure to make the—often counterintuitive—best decisions under uncertainty. The real value-destroyers are biases and the failure to build in the flexibility to exploit the different ways the future might play out.
If you underestimate uncertainty, you are likely to underinvest in flexibility to manage its consequences. Making the best decisions requires an accurate assessment of uncertainty—unbiased, neither optimistic nor pessimistic—and an unbiased approach to managing its consequences, putting as much effort on capturing upside opportunities as on mitigating risks.
In this webinar, Professor Reidar B. Bratvold of the University of Stavanger, Norway, will illustrate and discuss a valuation approach that brings an optimistic view to uncertainty. While there is no doubt that uncertainty can lead to loss, uncertainty can also be exploited by augmenting the upside and reducing the downside risks inherent in investments.
About the Speaker
Dr. Reidar B Bratvold is a professor of decision and data analytics at the University of Stavanger and the Norwegian Institute of Technology. His research interests include decision analysis, data assimilation and analytics, portfolio analysis, real-option valuation, and behavioral challenges in decision making. Prior to academia, he spent 15 years in the industry in various technical and management roles. He is the author of the 2010 book Making Good Decisions, published by the Society of Petroleum Engineers.