810 Risk Management and Uncertainty

Tuesday, 7 October 2008
1:30 PM - 3:00 PM

Increasing Understanding by Identifying Uncertainty

Paper number: 810-2
Program: GULF COAST ASSOCIATION OF GEOLOGICAL SOCIETIES
Time: 1:45 PM – 2:00 PM

Authors

Abstract

When facing decisions associated with investing in a prospect, leadership teams often seek accountability and a number. Is it not understood that a number does not represent the full range of outcomes? Likely it is, but due to other organizational biases it may be more appropriate for the leader to ask for a number to simplify decisions and accountability.

When bias creates uncertainty in the probability distribution, no one believes anything other than that the estimate is wrong. To improve confidence in distributed numbers, an organization must understand its biases and seek to reduce them. This can be accomplished through the review of historic trends, technical reviews by unbiased professionals, training, awareness, and organizational process improvements.

After walking through a case study on this journey of improvement, it will be shown that leadership can see the value of distributions and will quickly learn to value uncertainty information.