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Introduction to Probability Management

Probability management is the discipline of communicating and calculating uncertainties as auditable data arrays called Stochastic Information Packets or SIPs. This course provides a basic introduction to the subject.

There is one session available:

After a course session ends, it will be archived.
Starts Sep 16
Estimated 10 weeks
1–5 hours per week
Self-paced
Progress at your own speed
Free
Optional upgrade available

About this course

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This course assumes that you are comfortable with Microsoft Excel, but you do not need training in statistics. If you wish to receive a verified certificate, you must download the free SIPmath™ Modeler Tools for Excel from nonprofit ProbabilityManagement.org, and it is recommended that you procure The Flaw of Averages: Why we Underestimate Risk in the Face of Uncertainty, John Wiley & Sons, either the 1st or 2nd Edition.

At a glance

  • Language: English
  • Video Transcript: English

What you'll learn

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  • How to recognize the Flaw of Averages, a set of systematic errors that occur when uncertainties are represented by single numbers, usually an average. It explains why so many projects are behind schedule, beyond budget, and below projection.

  • The Arithmetic of Uncertainty , which performs calculations with uncertain inputs, resulting in uncertain outputs from which you can calculate true average outcomes and the chances of achieving specified goals.

  • How to create Interactive Simulations which may be shared with any Excel user without the need for add-ins or macros. The approach is just as at home in R, Python or any programming environment that supports arrays.

Section 1: Probability Management Basics

  • Post Traumatic Statistics Disorder (PTSD)
  • The Flaw of Averages
  • The Arithmetic of Uncertainty
  • Limbic Analytics: Connecting the Seat of the Intellect to the Seat of the Pants
  • The Hindu/Arabic Numerals of Uncertainty
  • The Probability Power Grid
  • Data Table Simulation in Excel

Section 2: The Five Mindles of Uncertainty

A MINDle lets you grasp something with your mind as a HANDle lets you grasp something with your hand. Understanding the arithmetic of uncertainty requires grasping five concepts beyond the operations of standard arithmetic. They are:

  • Risk vs. Uncertainty
  • Uncertain Numbers
  • Combinations of Uncertainties
  • Plans Based on Uncertainties
  • Interrelated Uncertainties

Section 3: Introduction to Applications

  • Nonlinear cost functions
  • Building a Risk Model
  • Estimating distributions from forecasts

Section 4: The Human Element

The PTSD picked up in a statistics class may be addressed through the following concepts:

  • The permission to be uncertain
  • Unambiguous Uncertainty
  • Limbic Analytics

About the instructors

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