Putting a price on uncertainty
Risk valuation and risk management case studies.
- Level
- Bitesize
- Learning time
- 1 hour 15 minutes
- Where
- Strategic Risk
- Price
- £39
When you step up to a higher level, what you paid in the last 12 months for lower-level courses inside the bigger course comes off its price, in proportion to how much of each is inside it, whichever topic it's from. Courses at the same or a lower level don't give credit against each other. A Focus course or above always costs at least £15. Read the full terms
Certificate of Completion
Overview and Outcomes.
Overview
A colour rating can rank attention but cannot say what a risk is worth. This module builds practical tools for valuing risk: expected monetary value and decision trees for choosing between options, and Value at Risk for sizing an exposure, with stress testing beside it. The collapse of Long-Term Capital Management shows why a precise number is not certainty. It closes with the economics of insuring versus self-insuring. This closing capstone offers three more failures and no new theory: Barings Bank and Nick Leeson, the Deepwater Horizon oil spill, and the blocking of the Suez Canal by the Ever Given. You read each case first, then test your view against the frameworks in play, including the three lines of defence, Kaplan and Mikes's categories, fat tails, the two sided matrix and the four Ts, before planning how to use the toolkit at work.
What you'll develop
In this Bitesize, you will develop the ability to:
- Calculate expected monetary value and build a simple decision tree that includes doing nothing as an option.
- Explain what Value at Risk measures, what it assumes and misses, and how it differs from expected monetary value.
- Assess whether to insure or self-insure a risk by comparing expected loss, the value of certainty and your changing risk capacity.
- Analyse an operational, a catastrophic and an external risk failure by identifying the frameworks that explain each.
- Distinguish risks that call for prevention from those that call for considered acceptance through diversification and buffering.
The Modules.
1 hour 15 minutes of learning.
- 14Valuing Risk: Putting a Number on UncertaintyA colour rating can rank attention but cannot say what a risk is worth. This module builds practical tools for valuing risk: expected monetary value and decision trees for choosing between options, and Value at Risk for sizing an exposure, with stress testing beside it. The collapse of Long-Term Capital Management shows why a precise number is not certainty. It closes with the economics of insuring versus self-insuring.38 min
- 15Applied Case Studies II: A Second CapstoneThis closing capstone offers three more failures and no new theory: Barings Bank and Nick Leeson, the Deepwater Horizon oil spill, and the blocking of the Suez Canal by the Ever Given. You read each case first, then test your view against the frameworks in play, including the three lines of defence, Kaplan and Mikes's categories, fat tails, the two sided matrix and the four Ts, before planning how to use the toolkit at work.38 min
Go deeper, and pay only the difference
- You are hereBitesize, 1 hour 15 minutes, £39
- Next stepFocus, Weighing the odds, 2 hours 30 minutes, £69. Already own the Bitesize? You pay £30.
- Explore, Owning the risk, 5 hours, £129. Already own the Bitesize? You pay £90.
- The whole topicImmerse, Risk worth taking, 9 hours 30 minutes, £249. Already own the Bitesize? You pay £210.
When you step up to a higher level, what you paid in the last 12 months for lower-level courses inside the bigger course comes off its price, in proportion to how much of each is inside it, whichever topic it's from. Courses at the same or a lower level don't give credit against each other. A Focus course or above always costs at least £15. Prices per person. Read the full terms
Other Bitesize in the Strategic Risk topic
- Why risk belongs to leadersRisk management basics for leaders45 minutes£39
- Risk as part of the planRisk culture and risk in strategy1 hour 30 minutes£39
- Joining up the risk pictureEnterprise risk management and COSO1 hour 15 minutes£39
- How much risk is enough?Risk assessment and board risk appetite1 hour 15 minutes£39
- When reputations are on the linePublic sector risk and reputational risk1 hour 15 minutes£39
- What lies over the horizonGlobal and emerging risk case studies1 hour 15 minutes£39