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Modelling volatility
An estimate of variability is the most important input into a risk model. Risk arises because the actual variable values differ from the expected value. This is why the first question you need to ask yourself in order to estimate risk is: How much can the variables be expected to differ from the expected value?…
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Risk modelling
The strategic decisions of a business are based on plans and assumptions about how the future will develop. These assumptions are more or less uncertain, in fact, the only thing that is certain that the outcome will not be exactly as expected. A plan and the financial estimates it contains is a modelled representation of…
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The risk of planes crashing due to volcanic ash
When the Icelandic volcano Eyafjallajøkul had a large eruption in 2010 it lead to closed airspace all over Europe, with corresponding big losses for airlines. In addition it led to significant problems for passengers who were stuck at various airports without getting home. In Norway we got a new word: “Ash stuck” ((Askefast)) became a…