What is the role of models in managerial decision-making? Briefly review the
different types of models along with their characteristics. How is model validation
done?
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Models say what a pure rational based decision should be ignoring strategy and politics, discarding the true beliefs of the person making the decision. Models could not duplicate the decision-making process; however they could be the Fifth Solvency II key function.
The main types of scientific model are visual, mathematical, and computer models.
An effective validation includes: firstly, evaluating the processes used to integrate the model's conceptual design and functionality into the organisation's business setting; and, secondly, examining the processes implemented to execute the model's overall design.
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