Skip to main content

​
Which option is best?

The option with the highest average net value among those that meet the rules. Net value is benefits minus costs, compared with the current approach and adjusted for timing. Cash effect is shown separately from value such as staff time freed up, because freed hours do not reduce the payroll unless something else changes.

​
How risky is it?

An option can have a high chance of loss and still be best on average, for example a small chance of a very large win. Both numbers are shown so neither is hidden.

​
Expected shortfall

An objective with its chance of falling short and of beating the target, checked against risk appetite When an outcome falls short of its target, how far does it fall? The report shows the chance of falling short and compares the size of shortfalls with your risk appetite: how big a shortfall you tolerate and how often. A warning signal means the option is not winning against your rule, not necessarily that it loses money.

​
Comparing any variable

The comparison view lets you pick any variable (net value, cash, any step of the calculation) and see it for every option side by side, as ranges and as overlaid distributions.

​
Risk tolerance and certainty equivalent

If one decision is large enough that a bad outcome would really hurt, you can state a risk tolerance (an amount of money, set before you see results). The app converts each option’s spread into a certainty equivalent: the guaranteed amount that would feel as good as the gamble. The gap below the average is the risk premium.
  • If the same option wins at every sensible tolerance, risk attitude does not matter here. Say so and move on.
  • If the winner switches within the range you would consider, the decision is about appetite for risk. Take that to the decision owner.
Hard limits on losses belong in constraints, not in risk tolerance.
Next: Sensitivity and value of information