Risk Analyzing

Typical Properties of the Risk Function

The Enterprise Risk Manager needs only a few input data to find out the risk function

The procedure to obtain a density function to quantify a risk function or a part of a risk function, includes the following five steps.

 In step one, information is gathered on some of the different typical properties of the risk function. We need

 the best case T{R(x)i(best)},

 the real caseT{R(x)i(real)} and

 the worst caseT{R(x)i(worst)}

 In step two, the part of the range of the risk function is chosen that is to be quantified by means of a density function f(i;p1;p2;p3).

 In step three, some typical properties are determined of the selected part of the range of the risk function.

 In step four the Enterprise Risk Manager finds out every generally viable density function f(i;p1;p2;p3) which fulfils the given specific prerequisites.

 In step five, one generally viable density function f(i;p1;p2;p3) is chosen from the Risk Manager.