Risk and Uncertainty in Decision Making

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Overview

2.5 Credits
ONLINE

This CPE course looks at how risk and uncertainty can be built into the decision making process. It explores, in depth, the probabilities and expected values, including histograms, utility theory, advantages and disadvantages of expected values, and standard deviations. In addition, there are multiple illustrations throughout to help in gaining an understanding of risk and uncertainty in the decision making process.

Objectives

  • Differentiate risk and uncertainty
  • Identify decision makers' attitudes to risk and effect on decision making
  • Apply sensitivity analysis, expected values, standard deviations, and probability tables to decision making.
  • Apply decision models to deal with uncertainty in decision making, for example decision trees.

Major Topics

  • Risk and uncertainty
  • Probabilities and expected values
  • Pay-off tables and decision criteria
  • Maximax, maximin and minimax regret
  • Decision trees and multi-stage decision problems
  • Sensitivity analysis
  • Conditional probabilities - the Bayes theorem

Designed For

Management accountants wanting to develop skills in financial performance management CGMA exam candidates
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