A publisher is considering launching a new magazine for women in the 18–25 years age group. It is thought to be vital to the long-term success of the magazine that its sales should reach break-even point within its first year. When asked to make an estimate of the risk of this target not being achieved, the marketing manager, after some thought, states that she thinks the risk is only about 1 in 10.
(a) Sketch out the key features of a risk analysis model which might be appropriate for this estimate and explain how the estimate would be obtained from the model.
(b) Suppose that your risk analysis model suggests that the risk of not achieving the target is about 1 in 4. Explain why the estimate from the model might differ from the ‘holistic’ estimate of the marketing manager and discuss how the conflict might be resolved.