Assessing project risk, Financial Accounting

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In assessing project risk it is significant to be clear about the meaning of risk. From an academic perspective risk demotes to a set of circumstances regarding a given decision which can be assigned probabilities. This distinguishes risk from improbability which implies that it isn't possible to assign probabilities to future events. Actually the two terms are often utilized interchangeably but the distinction is a useful one for the purposes of analysis and discussion.

There are numerous methods commonly considered to assess project risk and uncertainty such as probability analysis, risk-adjusted discount rates, sensitivity analysis, certainty equivalents and range estimates.


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