Businesses, banks, insurance companies, and government agencies all recognize that the future is unknowable. Alternative outcomes for actions taken can be quantified and analyzed to determine how likely they are. This comprises the basis for risk assessment – how much does one stand to gain or lose, and how likely are the different outcomes that might result?
In a complex world, assessment of the likelihood of future events, the impact of changes in external conditions, and the impact actions taken by management or by the government become a basis for modeling the future.
A planner may want to know the most likely outcomes or the best ways to develop a plan to obtain maximum returns. Alternatively, he may wish to know the worst outcome that might occur so he can hedge, reserve, or insure against that eventuality.
A reasonable assessment of risk helps avoid or prepare for a potential catastrophe in the future. We help financial entities assess risk and plan using optimization tools applied directly to the problems they face.