There is so much uncertainty that we end up ignoring it. We make arbitrary assumptions and look at just the downside or just the upside.
- Poor decisions that ignore major risks and opportunities. Company is blind-sided by foreseeable futures.
- Management is uncomfortable with uncertainty and demands unrealistic "certainty" from analysts. Analysts lack understanding and tools to quantify, calculate, and explain uncertainties.
- Identify key uncertainties, including risks and opportunities. Explore multiple scenarios. Hire or train analysts who can address uncertainty using probabilities. Adopt software tools that support decision trees and simulation to analyze and communicate uncertainties. Identify robust alternatives.