Page 259 - RISK Management IC 86

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The subjective data often consists of personal
judgements, and hence its value varies according to
the training, experience and common sense of the
person involved.

Also, often in risk management decision making situations,
there is a lack of statistical data, and the use of subjective
probability estimates, or the subjective modification of
scant statistical data, is necessary.

However, before subjective judgements are made, all
available facts should be collected and as many expert
opinions should be sought. Subjective probability estimates
are a mixture of statistical observation and personal
judgement. Though skeptics often find these estimates
suspicious, they usually provide practical and useful
guidelines.

(b) Risk Avoidance - Refer Q1d November 2005

(c) Statistical Inference - Often a risk manager have only a
limited amount of past loss data from which he has to
predict the future losses. The branch of statistical theory
which enables generalization or predictions to be made

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