Investing under uncertainty

Policy makers and companies undertake decisions in complex environments and operate within uncertain circumstances. In many of these situations, these decisions are subject to risks that cannot be avoided or prevented, but they can be made more transparent and manageable. Managing these risks, anticipating their potential manifestation and incorporating flexibility in the process to mitigate undesirable consequences while the system remains operational, demands experience with the actual systems and with risk management.

Stratelligence is experienced in implementing projects in a complex and dynamic context in which large investments find their place and where the manifestation of risks, despite a small probability, could be disastrous, or where minor changes in the project or business plan can have drastic consequences.

In these circumstances, one of the techniques that Stratelligence utilises is Option Analysis. Whilst seemingly appropriate decisions at one point, made on the basis of existing information, can commit organisations to long term investments, they may need to be revised on the basis of new information. Long pay-back periods on investments can induce risks that seem insurmountable and cause organisations to abandon the investment.

Option analysis is a method whereby the consequences of new information are examined, not only applied to one upon decision making moment, but conducted over period of cumulative decisions, generating flexibility and alternative options or strategies. In this way, risks can be limited by making strategic choices from alternative options, based on a standard evaluation method, through which optimal investments can be made in a responsible manner.