Four generic strategies for dealing with uncertainty are to

• explicitly consider uncertainty when estimates are generated by

>- using best predictor variables in generating estimates.

>- analyzing effects of estimation errors on es¬ timates using sensitivity analysis.
structure costs to adjust to uncertain outcomes.
use options and forward contracts to manage price risks.
• use insurance to indemnify against occurrences of specific events such as acts of nature.
>■ fire, theft, and liability risks. LO.1