What three techniques are used to assess stand-alone risk?

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What three techniques are used to assess stand-alone risk?

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What three techniques are used to assess stand-alone risk?

Explanation & AnswerSolution by a verified expert

Explanation

Following are the ways to assess the stand-alone risk of a project:

Sensitivity analysis: It involves measurement of change in net present value corresponding to a change in a single input variable.
Scenario analysis: It involves measurement of change in net present value corresponding to change in more than one variable.
Monte carlo simulation: It assesses the standalone risk by combining the sensitivity analysis, probability distribution and correlation between the input variables.

Verified Answer

Stand-alone risk can be assessed using sensitivity analysis, scenario analysis and monte carlo simulation.

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