Question 2 Using real options in a risk environment can be beneficial if the enterprise need to...

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Finance

Question 2
Using real options in a risk environment can be beneficial ifthe enterprise need to make decisions on switching or acquiringmultiple suppliers. Ericsson and Nokia had different approaches inmanaging risk, which led to different outcomes during a businessinterruption event at a major supplier.
a. Explain the difference between risk and uncertainty.
b. Explain how real options how can be used to inform decisionsto reduce the impact of exogenous shocks on the enterprise.

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a Risk and Uncertainty Uncertainty refers to the lack of certainty of the happening of an event In financial terms uncertainty is different from risk in the sense that the outcome can either be positive or be negative ie the probability of happening of the events is not known On the other hand risk refers to probability of having a positive or a See Answer

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