Explain how risk, certainty and uncertainty influence the decisions that managers make.

Managers make decisions under certain, risk and uncertain environments. Certain environments offer complete information on possible action alternatives and their consequences. Very few managerial problems occur in certain environments. A risk environment lacks complete information, but offers 'probabilities' of the likely outcomes for possible action alternatives. Entrepreneurs and organisations generally depend on ideas and continued innovation for their success to overcome the risk environment. An uncertain environment lacks so much information that is difficult to assign probabilities to the likely outcomes of alternatives. At higher management levels, the conditions of uncertainty and risk are greater as the problems are more complex and unstructured. Therefore, managers at this level have to use creativity and use novel and unique ways of solving problems. Students should further discuss these concepts using examples from organisations.