CIMA BA2 · Chapter 9 · Question 1 of 11
What is the difference between RISK and UNCERTAINTY in decision making?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Under risk, probabilities can be assigned to possible outcomes; under uncertainty, they cannot be reliably estimated
Explanation
Risk exists when there are several possible outcomes and their likelihood can be quantified, for example from past data. Uncertainty exists when outcomes, or their likelihood, cannot be reliably predicted. Techniques such as expected values require probabilities and therefore apply to risk.
More Risk and uncertainty in decision making MCQs
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