The Little Book of Big Decision Models

MODEL 57

RISK–REWARD ANALYSIS

Use this to determine if there is a reasonable balance between risk and reward.

The Risk–Reward Model seeks to capture the various options that are available to management in a simple graph. Using Reward as the vertical axis and Risk as the horizontal it’s possible to assign each option its place on the grid.

A simple visual presentation like this eliminates the confusion that detailed arguments and data can produce and is a powerful aid to final decision making.

Source: Van Den Berg, G; Pietersma, P, Key Management Models, 3e., c 2013, p. 221. Reprinted and electronically reproduced by permission of Pearson Education, ...