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All risks and uncertainties associated with an option need to be fully identified and accounted for in the appraisal process. As stated in the HM Treasury Green Book (2003), in appraisals it is always likely there is some difference between what is expected and what actually happens. This is the consequence of biases unwittingly inherent in the appraisal process, and risks and uncertainties that materialise. As a result, it is important to identify and mitigate risks, and make allowances for Optimism Bias.
