Tools That Could Be Used For Decision and Risk Analysis

Document Type:Essay

Subject Area:Management

Document 1

Therefore, there are no limitations to which decision making tools is can be used in any particular situation, but instead the most relevant tool which would provide the most holistic tool in any situation would be the most recommended for use. Other Tools that could be used for Decision and Risk Analysis Introduction Decision and risk analysis is one of the fundamental aspects of running any organization. This process is important because it enables owners, managers and executives as well as individuals to adequately understand the weight behind the decision that they make (Raiffa, 2015). Decision and risk analysis is also crucial because it ensures that the best decision is made (Aven, 2015).   Several tools can be used such as decision trees, tornado diagrams and influence diagrams.

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Cinergyx Pty Ltd. Retrieved from https://creately. com/blog/examples/swot-analysis-templates-creately/ 2. PESTEL Analysis PESTEL analysis is an analytics tool that is mostly used for strategic business planning. It provides strategic framework for understanding the external factors that influence a business. Besides, the environmental factors include issues such as climate change and pollution and how these may affect the business (Jurevicius, 2013). PESTEL analysis improves the decision making and risk analysis as well as timing for an organization by analyzing the external factors surrounding that organization. In addition, when an organization understands its external environment, it is able to maximize on the opportunities identified and minimize on the potential threats to the organization. Pareto Analysis This is a tool that is used when the number of decisions that need to be made is large.

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A pareto analysis involves observing the causes of problems that exists in an organization or daily life which are represented in a histogram (Wild, 2017).   In addition to the delayed response from the customer service team, the shoppers choose to get a refund instead of exchanging the cloths. Because this leads to loss of revenue by the firm, the analysts will score the identified issues based on the level of loss in sales attributed to them. These include technical glitch, poor customer service and loss of customers in the long-term. Cost Benefit Analysis This is a tool that involves weighing the financial ramifications of each available/potential alternative as a means to reach a final decision that makes the most sense from an economic perspective (Boardman, et al.

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 It involves an objective evaluation of what an individual/organization spends relative to what they gain. For example, a cost benefit analysis and a pareto analysis will help in analyzing the financial implication of various efforts and decisions in an organization. Besides, it will help rank various issues that may arise within the business based on their financial effects on the business. On the other hand, SWOT and PESTEL analysis will help in the analysis of the internal and external factors that may affect an organization. This will help identify the opportunities, both internal and external, that the business can maximize on while also being able to minimize on the threats identified. Combining these three methods will help provide a broader perspective of the business both internally and externally thereby making it easier to get the maximum potential out of the business.

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