Risk management, or risk analysis, is a structured way of thinking about how an action will lead to a result. It serves as a guide for making choices, and helps you articulate both problems and solutions. Put simply, we help you analyze your objectives, your values, your goals, and the uncertainties present in a given situation, and we create models estimating the suitability of alternative decisions.

Obviously, one cannot predict with certainty the outcome of a particular decision. But careful analysis in decision-making is vital in a world of limited resources, active boards of directors, and litigious shareholders. Equally as important, risk management leads to greater satisfaction. First, it focuses thinking and helps you determine which of several choices is the “best” at a particular time. Next, regardless of the outcome resulting from the decision, you will be confident you made the best decision possible given the information, resources, and uncertainties that were present at the time the decision was made.

An example might be helpful: buying a lottery ticket and winning is a good outcome, but purchasing the lottery ticket may or may not have been a good decision. Obviously, bad decisions can sometimes lead to good outcomes, and good decisions to bad outcomes, but those possibilities are not really helpful when you are analyzing a situation. The quality of a decision must be evaluated on the basis of the decision maker’s alternatives, information, values, and logic at the time the decision was made. A structured method of decision-making can prove invaluable when big decisions have to be made.