It is a significant, but arbitrary choice that helps aid in choice making primarily based on expectations of what quantity of threat (or return) is acceptable to the business. As FAIR™ practitioners we perceive the worth of better fashions and the dangers of relying closely on weak assumptions. This guide demonstrates how a typical financial valuation technique, discounted cash flow (DCF) analysis, can be used alongside our FAIR assessments to produce greater high quality in our value comparisons in opposition to threat mitigation alternate options. A threat evaluation helps establish the place risks, threats and vulnerabilities exist internally and externally to a company.