Page 252 - RISK Management IC 86

Risk Management

It does not clearly reveal the output of various parts of
the factory, their interdependencies, and the dependence
on suppliers and customers. These details are better
observed and inferred from and input - output analysis.

Q4. Discuss how statistical methods can be employed
for quantification and analysis of risks.

Ans. Statistics is not simply the collection of numerical results
but is a tool used by many sciences which involves the
collection, organization, representation, analysis and
interpretation of data.

Even if the data is not in numerical form, the objective is
still to extract and analyse the essential features of the
data in a quantitative

There are several steps involved to present and
analyse the data :
(i) The first step is to collect all of the relevant data,

such as the number and losses suffered by a firm
during one year. However, the data presented in such
an ordered manner does not reveal anything about
lost trends, patterns of behaviour, or relationships
between variables.

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