Part 2. MM4XL Tools > 1. Strategic Tools > Risk Analyst > 1. How to run Risk Analyst > 1. Model Building > Model building

Risk Analyst

Model building

Scenario models are built in order to evaluate and communicate. To prove effective, they need to be well framed, that is, the problem must be clearly identified and its relevance must be understood within the decisional team. For example, if we are facing a sharp loss in sales, it does not necessarily have to be a matter of price, it could be an issue of product performance. A clear understanding of the business environment is a fundamental requisite to identifying problems and framing models.

When the issue is clear, the analyst, alone or together with the decisional team, builds a model in MS Excel. This is a common activity among business analysts and marketers. When working with Risk Analyst the model is made of one or more input variables that, nested together according to the logic of the analyst, produce an output result. The output result is the information that the decision-maker will use to make his or her decision.

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