Enterprise Risk Management at Russian telecoms giant, MegaFon

Every year, the eight regional branches of Russian mobile network operator MegaFon are required to undertake a major planning and accounting exercise for the 12 months ahead. Each branch states the risks it faces, such as competition, changes in legislation that will require it to operate differently, price increases and changes to staffing costs. They also calculate how much each budget will be over or under the forecast.  

The risk management team at MegaFon’s headquarters amalgamates the information from each of its offices and simulates possible scenarios using a model using @RISK. The variables within these models are analysed in order to identify and mitigate against the five critical factors most likely to significantly affect the company’s gross revenue.

In addition, @RISK shows realistic minimum, best case and median budget figures and the probability of their occurrence. These are compared to the budget plans to determine whether the forecast is too aggressive or not ambitious enough. Overall, the management team can see whether their desired revenue is achievable.

At the same time, MegaFon needs to plan for the continuous upgrading of its network. Projects include building new antenna, installing the latest equipment and laying fibre optic cable. In 2012, MegaFon took the decision to invest in a large data centre construction project.

Two potential locations were shortlisted and the management team used the DecisionTools Suite to make an informed decision on the optimal one. TopRank was used to perform sensitivity analysis to identify the factors in each location that would have the most influence over the total cost of the project. @RISK was then applied to forecast how these critical factors might change. This allowed MegaFon to understand the most likely Net Present Values (NPVs) for each possible location and identify the risks for building or not building (i.e. opportunity cost) each data centre.

Using the DecisionTools Suite enables MegaFon to integrate risk management within its budgeting and investment planning processes. This provides the company’s management team with transparency and understanding about the risks involved in planning, and therefore facilitates decision-making without guesswork. As a result, the company can maximise capital expenditure efficiency.

» Read the case study: Enterprise Risk Management programme at Russian telecoms giant MegaFon

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This Month: Introductory Risk & Decision Analysis Software Demonstrations in Four Different Languages

Introduction to Risk & Decision Analysis using @RISK & The DecisionTools Suite This month we are offering our Introduction to Risk and Decision Analysis using @RISK and the DecisionTools Suite webcast in a variety of languages including German, French, Portuguese and English.

Our Regional Sales Managers and Trainers have designed these webcasts to provide an entry-level introduction into probabilistic analysis and will show how Monte Carlo simulation and other techniques can be applied to your everyday business analyses. If you build models in Excel then Palisade solutions can almost certainly help you to make more informed decisions, right from your desktop.

Sign up today for the webcast presented in the language of your choice!

Deutsch:
Einführung zur Risiko - & Entscheidungsanalyse
mit @RISK und der DecisionTools Suite

11. Februar 2014 - 10:00 am CET
(9:00 am UTC/GMT, 4:00 am EST)
» Jetzt kostenlos registrieren

Français:
Introduction a l’analyse des Risques et décisions
avec @RISK et DécisionTools Suite

11 février 2014 - 10:00 am CET
(9:00 am UTC/GMT, 4:00 am EST)
» Inscrivez-vous gratuitement

English:
Introduction to Risk and Decision Analysis
using @RISK and the DecisionTools Suite

13 February 2014 - 11:00 am CET
(10:00 am UTC/GMT, 5:00 am EST):
» Register Now for Free

Português:
Análise Quantitativa de Risco Utilizando o
@RISK e o Decision Tools Suite

21 de fevereiro 2014 - 10:00 am Brasília Time
(1:00 pm UTC, 2:00 pm CET)
» Inscreva-se grátis

Também em Português, AMANHÃ:
Simulações de Séries Temporais com o @RISK
7 de fevereiro 2014 - 10:00 am Brasília Summer Time
(12:00 Noon UTC, 1:00 pm CET)


These webinars will explore some of the ways in which organizations are applying Palisade tools. From oil and gas, insurance and finance through to healthcare, defense and construction, @RISK and the other tools in the DecisionTools Suite enhance the decision making capabilities of some of the world’s most successful companies.

For nearly 30 years, Palisade software and solutions have been used to make better decisions. Cost estimation, NPV analysis, operational risk registers, portfolio analysis, insurance loss modeling, reserves estimation, schedule risk analysis, budgeting, sales forecasting, and demand forecasting are just some of the ways in which the tools are applied. The webinar will demonstrate how easy – and necessary – it is to implement quantitative risk analysis in any business.

If you would prefer to join us for a more in depth Training be sure to check out this previous post: Start the New Year Right with Palisade Risk & Decision Analysis Software Training

 

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Free Webcast this Friday: The Cure for the Flaw of Averages, Using Palisade DecisionTools Suite to Visualize Risk and Uncertainty

Presented by: Andrew Pulvermacher, Nighthawk Intelligence, LLC
When: Friday, March 21, 2014 at 11:00 am EDT

NightHawk Logo » REGISTER NOW for FREE

The Cure for the Flaw of Averages, Using Palisade DecisionTools Suite to Visualize Risk and Uncertainty will be presented by Andrew Pulvermacher of Nighthawk Intelligence, LLC. On Friday, March 21, 2014 at 11:00 am EDT, Mr. Pulvermacher will take you on a 50 minute journey through historical risk philosophies to today's industrial race to harness the benefits of risk based decision making. This session will cover the finer points of the Flaw of Averages and Probability Managements' cure of the Flaw of Averages. The presentation will wrap up with a demonstration of the immediate benefits that Palisade's DecisionTools Suite provides to the organizational decision making process through the illumination of risk and the interactive risk modeling.

Andrew Pulvermacher is the Founder and Chief Probability Officer at NightHawk Intelligence, LLC. NHI provides risk analysis services to their clients to develop high quality strategies through a better understanding of value in the context of risks and uncertainties. NHI works to transfer focus from descriptive data analytics to predictive analytics – improving insight and driving risk-informed decision making throughout the organization.

With over a decade of experience in analytics with companies such as Amazon, Best Buy, Merrill Lynch, and CUNA Mutual Group, Drew is focused on improving enterprise value through the use of Operation Research methodologies for enhancing productivity, efficiency, and profitability. With specific expertise in probability management, portfolio theory, and continuous improvement, Drew advances complex business processes and delivers innovative business development strategies for Fortune 20 corporations as well as small, community based businesses.

Click here to view his presentation from the 2013 Palisade Risk Conference in Las Vegas.

Learn more about last year's Palisade Risk Conference in Las Vegas here:
Risk Professionals Gather in Vegas for Palisade’s 2013 Risk Conference
 

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Free Webcast this Thursday: "Using @RISK in Evaluating Full (late stage) Compound Development in the Pharmaceutical Industry"

Register now for a free webcast to be presented by Venkat Raman, A.C.A. MBA, Managing Principal of VR Advisors LLC.

"Using @RISK in Evaluating Full (late stage) Compound Development in the Pharmaceutical Industry" will discuss the financial evaluation of late stage development of compound in the pharmaceutical industry, but the rational, methodology and analysis discussed here has universal applicability to any multi-stage product development activities across industries. We will not discuss the real options analysis here, as this is not the intended objective of this presentation. But the webcast will:

  • Present the case - a miniature model of a full-blown real world case
  • Discuss the two financial models – the deterministic and the probabilistic models
  • Frame the case
  • Model the case
  • Discuss insights and results

JOIN US THIS THURSDAY - January 30, 2014 - 11:00am ESTRegister Now
"Using @RISK in Evaluating Full (late stage)
Compound Development in the Pharmaceutical Industry
"


Venkat Raman is a management consultant with over 25 years of extensive global experience in strategy and corporate finance across large and small enterprises. He began his career with the Big 6 and over the years has held leadership positions in the management consulting, insurance, technology services, and entrepreneurial ventures. Venkat brings his collective experience, wisdom, and judgment to every engagement. Venkat is an MBA from Indiana University, a qualified CPA, and a Chartered Accountant. Extended bio here.

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Custom Solutions: Using @RISK for Oil Field Development Decisions

Oil companies need to assess new fields or prospects where very little hard data exists. Based on seismic data, analysts can estimate the probability distribution of the reserve size. With little actual data available, companies still must quantify and optimize the Net Present Value (NPV) of this asset. The number of wells to drill, the size of the processing facility, and the plateau rate of the field must all be optimized. The following example is a custom application written by Palisade Custom Development using @RISK’s XDK in Excel.

It is a custom application written by Palisade Custom Development using @RISK’s XDK in Excel.  - See more at: http://blog.palisade.com/blog/decision-making-under-uncertainty-2/how-to-create-a-custom-application-for-stock-portfolio-optimization-right-in-your-spreadsheet#sthash.0by9ZU0n.dpuf
It is a custom application written by Palisade Custom Development using @RISK’s XDK in Excel.  - See more at: http://blog.palisade.com/blog/decision-making-under-uncertainty-2/how-to-create-a-custom-application-for-stock-portfolio-optimization-right-in-your-spreadsheet#sthash.0by9ZU0n.dpuf
It is a custom application written by Palisade Custom Development using @RISK’s XDK in Excel.  - See more at: http://blog.palisade.com/blog/decision-making-under-uncertainty-2/how-to-create-a-custom-application-for-stock-portfolio-optimization-right-in-your-spreadsheet#sthash.0by9ZU0n.dpuf

Oil Field Development Screenshots

This analysis can be simplified by representing the production profile by three phases:

  1. Build up: The period when wells are drilled to gain enough production to fill the facilities.
  2. Plateau: After reaching the desired production rate (plateau), the period when production is continued at that rate as long as the reservoir pressure is constant and until a certain fraction of the reserves is produced. In the early stages of development, this fraction can only be estimated, and production above a certain rate influences plateau duration.
  3. Decline: The period when production rates, P, decline by the same proportion in each time step, leading to an exponential function: P(t) = P(0) exp(-c*t), where t is the time since the plateau phase began and c is some constant.

With only estimates for the total Stock Tank Oil Initially In Place (STOIIP = reserve size) and percent recovery amounts, the objective is to select a production rate, a facility size, and well numbers to maximize some financial measure. In this example, the measure used is the P10 of the NPV distribution. In other words, the oil company wants to optimize an NPV value which they are 90% confident of achieving or exceeding.

As described, the problem is neither trivial nor overly complex. A high plateau rate doesn’t lose any reserves, but it does increase costs with extra wells and larger facilities. However, facility costs per unit decrease with a larger throughput, so choosing the largest allowed rate and selecting a facility and number of wells to match might be appropriate.

This is just one example of how Palisade can provide personalized risk solutions for your business needs. We offer custom software development services as well as software developer kits to create your own applications integrating @RISK, RISKOptimizer, and other Palisade technology. We can also help automate Palisade software using VBA in Microsoft Excel or Project.

» Learn more about Palisade's Custom Development

You may also be interested in the following:

Free Webcast this Thursday: "Exploring Oil & Gas Applications of @RISK and the DecisionTools Suite" - See more at: http://blog.palisade.com/blog/risk-and-decision-analysis-news/free-webcast-this-thursday-exploring-oil-and-gas-applications-of-risk-and-the-decisiontools-suite#sthash.sev3ym2s.dpuf

Cost Risk Analysis Example Movie: Palisade's Custom Development Team uses @RISK's XDK for this custom application
 

 

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Start the New Year Right with Palisade Risk & Decision Analysis Software Training

Kick off the New Year with some fresh ideas presented to you by the Palisade Training Team. Our hands-on software training courses will take place in cities all around the globe. Join us for a training near you, to learn how to incorporate @RISK and the DecisionTools Suite into your models and help you make better decisions in 2014!

2014 Palisade Training Opportunities

Australia
Melbourne: 22-23 January 

Brasil
Rio de Janeiro: 29 - 31 de janeiro
São Paulo:19-21 de fevereiro
Belo Horizonte: 19 - 21 de março

Latinoamérica
México D.F - 28-30 de enero

EMEA and India
London: 28-30 January
Munich: 4-6 March
London: 4-6 March

US and Canada
Houston: 14-16 January
Ottawa: 11-13 February
Atlanta: 18-20 February
Washington DC: 4-6 March

» Register now for a Palisade  training seminar

Learn to Make Better Decisions 

For almost 30 years, Palisade software and solutions have been used to make better decisions. Cost estimationNPV analysisportfolio analysisoperational risk registersinsurance loss modelingreserves estimationschedule risk analysisbudgetingsales forecasting, and demand forecasting are just some of the ways in which Palisade software tools can be applied.

By attending a Regional Seminar, you can learn how to apply @RISK and the DecisionTools Suite to real-life problems. All courses include complimentary materials with dozens of example models, plus lunch and breaks. Professional development credits are available, including CPE, PMI, and AACEI.

By the end of a 2-day course, attendees should be able to perform defensible risk assessments using @RISK software. The 3-day course covers the other products in the DecisionTools Suite, including PrecisionTreeRISKOptimizerEvolverTopRankStatTools, and NeuralTools. Our trainings utilize @RISK and the DecisionTools Suite 6.2.

» Learn more about the new features in version 6.2

 

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Risk Professionals Gather in Vegas for Palisade’s 2013 Risk Conference

The 2-day Palisade Risk Conference in Las Vegas brought together around 170 decision-makers from a wide range of industries at the Mandalay Bay Resort & Casino.

In the ever-popular Software Presentations track, Palisade developers and trainers covered features of the DecisionTools Suite and @RISK. At the same time, 3 additional tracks featured experts from CH2M Hill, Westinghouse, Lockheed Martin, Intel, Premera Blue Cross, Tennessee Valley Authority, and many others. These presentations covered industry case studies from fields as diverse as aerospace, energy, agriculture, finance, healthcare, and many more.

» View presentations from the 2013 Palisade Risk Conference in Las Vegas

Mark Krahn presented at 2013 Palisade Risk Conference in Las Vegas

Conference attendees were also able to meet with Palisade consultants in one-on-one Expert Sessions. The Expert Sessions were well-received by both conference participants and Palisade consultants and trainers. Participants get a chance to bring their own models for the consultant to review, while consultants get a chance to discuss interesting applications of Palisade software in detail.

As always, the Risk Conference events are invaluable opportunities for networking and learning. "As an introduction to the software, I thought this conference was eye-opening. As I get more familiar with the software, I can see future conferences being valuable in honing my skills and learning new tricks and different perspectives on using the software," said Cory Forgrave, Economic Analyst in the DOI Division of Energy and Mineral Development. See more quotes from participants below.

 

Keynote focuses on successful BorgWarner
project with Palisade Custom Development

Brian Maturi, Director of Risk Management at BorgWarner, delivered the keynote address. Mr. Maturi described the successful implementation of a capital appropriations model that is used by around 300 financial analysts, controllers and program managers in 17 countries around the world.

Maturi and BorgWarner worked with Palisade’s Custom Development team to incorporate @RISK functionality into their model so that non-expert users could easily input data, and obtain standardized reports for business managers. The users of the system are not statisticians, so the model needs to be powerful, yet simple. “We wanted a system that could model 90% of the risks rather than an overly complex system that tries to model everything,” said Maturi. Palisade developers were able to take his instructions and build a flexible model with the user interface he was looking for.

Explains Maturi, “We have educated about 2,000 managers over the years in how to interpret the @RISK outputs, and more importantly, how they can use the information to design business strategies to manage, mitigate and even exploit the risks using real options thinking.”

“We are with Palisade for the long haul,” adds Maturi. “My company is very, very good at engineering leading edge automotive products. Palisade is very, very good at building risk based models.”

» View Brian Maturi’s keynote presentation
» View presentations from the 2013 Palisade Risk Conference in Las Vegas

 

A Global Series

The 2013 Risk Conference series took place in over a dozen cities covering 6 continents, and brought together hundreds of risk analysis professionals. We have announced dates for the EMEA region for 2014, with more dates coming soon. We hope you will be able to join us.

» 2014 Conference dates

Chris Albright presenting  at 2013 Palisade Risk Conference in Las Vegas

» See more photos from the 2013 Vegas Risk Conference

 


Quotes from the 2013 Las Vegas event

"Very good conference with good usage of time."
— Mark Mendonca, Program Risk Management, Ernst & Young

"Excellent opportunity to explore all aspects  of risk analytics!"
— Kurt Carson, Senior Quant Analyst  in ERM group, Chelan PUD

"Excellent conference. Very informative.  Great topics."
— Laurie Rutherford, Director, Enterprise Risk Management at CenterPoint Energy

"Great conference!"
— Matt Rosenberg, RoseCap Investment Advisors

"A valuable and educative experience."
— Richard Horsfall, Consultant

"Excellent learning and networking opportunity."
— Mike Wallace, Consultant

 “As an introduction to the software, I thought this conference was eye-opening. As I get more familiar with the software, I can see future conferences being valuable in honing my skills and learning new tricks and different perspectives on using the software.”

Cory Forgrave, Economic Analyst in the DOI Division of Energy and Mineral Development

 

 

 

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Minimising Financial Risk in Infrastructure PPP Projects

Recent practice in Private Public Partnership (PPP) transport projects has seen the participating governments and public agencies gradually moving from demand-based contracts to availability-based ones. These latter agreements see the public partner bear the financial implications of actual demand being either over or under that forecast, while risks associated with construction and service availability are transferred to the private partner fulfilling the contract.

Civil engineering consultancy Solvĕre has developed a methodology to enable the partners involved in PPP infrastructure projects to minimise their financial risks by accounting for each element of the project that can affect its financial status and therefore profitability. To do this Solvĕre uses @RISK to estimate the performance and to forecast the potential deductions in the payment mechanism for each project. (How much and at what intervals the government pays the contractor is determined by the ‘payment mechanism’. This relates to the quality of the service provided by the private partner whose revenue is therefore dependent on its performance score and the incentive or penalty rules of the contract).

The key objective is to quantify, for various levels of probability, the economic impact of the performance criteria not being met. Solvĕre’s @RISK model takes into account the contract specifications and the resources committed by the operator to complete the project and undertake maintenance of the infrastructure, combining them in order to evaluate the expected level of performance on this base scenario.



Solvĕre believes that the highly-complex nature of PPP contracts, coupled with payment mechanisms being subject to a significant degree of uncertainty, requires in-depth analysis in terms of probability and risk. Using @RISK, it has developed a way to do this, thereby enabling informed decisions regarding the feasibility of the project and a proper risk allocation between the partners.

» Read more about Solvĕre's use of @RISK

 

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Free Webcast this Thursday: "Exploring Oil & Gas Applications of @RISK and the DecisionTools Suite"

Register now for a free webcast to be presented by Rafael Hartke, Palisade's Oil and Energy Industry Consultant. "Exploring Oil and Gas Applications of @RISK and the DecisionTools Suite: Examples from Petrobras and Others" will demonstrate how the DecisionTools Suite can be used in oil and gas exploration, production, and project decisions.

JOIN US THIS THURSDAY - December 19, 2013 - 11:00am ESTRegister Now
"Exploring Oil and Gas Applications of
@RISK and the DecisionTools Suite:
Examples from Petrobras and Others"

For decades, @RISK has helped engineers and finance managers estimate unknown reserves, value new projects against each other, and craft optimal strategies. PrecisionTree, another tool in the DecisionTools Suite, is commonly used for drilling strategy discussions, production siting problems, and other multi-stage, sequential decisions. RISKOptimizer comes into play when companies need to determine the best “mix” of projects in their portfolio in order to maximize overall returns.

For many years, Rafael Hartke solved these types of problems at Petrobras, the state oil company of Brazil and one of the world’s largest producers. In this free live webcast, he will draw on his experiences to demonstrate how @RISK and the DecisionTools Suite can be applied to common types of issues faced by oil and gas producers, such as: estimation of unknown reserves, analysis of multi-play concessions, structure of complex partnership agreements, optimization of uncertain project portfolios, and more.

Rafael Hartke is also a contributing writer for Oil & Gas Monitor. Here are a few of his previous articles:

 

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"Risk Analysis and Oil Production Curves" in 'Oil & Gas Monitor'

Oil & Gas Monitor

The use of risk analysis in the oil and gas industry can take many forms. Whether it’s safety risk, economic risk or schedule-based risk, it is critical to know what risk factors exist and the likelihood that they may occur. Doing so allows decision-makers to plan in a manner that will ensure the highest attainable rate of success.

In his most recent Oil & Gas Monitor article Risk Analysis and Oil Production Curves, Palisade's Oil and Energy Industry Consultant, Rafael Hartke, invites us to learn more about modeling oil production curves in face of uncertainty. He focuses on the production curve risk of a single oil well by exploring how risk factors affect the production curve and some common mistakes one should avoid when modeling production curves of oil projects. Read the full article to find out how deterministic models using most likely values or using expected values, compare to a probabilistic method using distribution functions and Monte Carlo simulation.

 

Risk Analysis and Oil Production Curves

 

In his next Oil & Gas Monitor article, Rafael will discuss what happens when dealing with the production curve of a group of wells and the statistical differences between a single well and a portfolio.

See also:

"Decision Trees and the Value of Flexibility II"  in Oil & Gas Monitor: Taking another look at "Bad" projects

"Application and Benefits of Risk Analysis for Decision Making in the Oil Industry" in Oil & Gas Monitor

"Practical Challenges of Implementing Risk Analysis in Oil Companies" in Oil & Gas Monitor

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Hitachi taps Palisade RDK Software to help manage Supply Planning

Hot off the heels of recent success in China, Palisade continues to establish a reputation for excellence in Eastern markets—this time in Japan. Hitachi Solutions East Japan, Ltd., a core IT company of the Hitachi Group, which employs some 400,000 people worldwide, has selected Palisade’s @RISK Developer Kit to help manage supply planning. 

With its headquarters in Sendai City in Miyagi Prefecture, Hitachi Solutions East Japan Ltd. is responsible for data and risk analysis of supply chain management, production, and sales & inventory planning and management. Analyzing these elements can be tricky, particularly when it requires forecasting demand and prices of raw materials. Using the @RISK Developer kit, Planning Department Research Division Head Masaru Tezuka and his team were  able to do these analyses.

There are a wide variety of risks in the manufacturing industry, including fluctuating variables such as demand, price, and foreign exchange. For demand fluctuation, supply is determined by demand forecasts. If the forecast underestimates demand, a supply shortage results, causing the company to miss opportunities to increase sales. If the forecast overestimates demand, inventory or disposal costs may follow. Price and currency fluctuations are also important factors for risk management in the manufacturing sector, and the improvement of forecast accuracy through risk analysis is essential to mitigate these risks.

For these problems, Hitachi wanted to develop a high level stand-alone GUI (graphical user interface) to visualize production and inventory conditions, while also incorporating @RISK’s excellent risk analysis functions. @RISK’s Developer Kit made it easy to tailor the program to Hitachi’s needs and desires. Through the use of tornado diagrams, Hitachi was able to understand the effects on profitability based on which product is produced or sold at what time, and observe the overall situation for each product.

In his case study for Palisade, Dr. Tezuka concludes, “It is crucial to develop strong risk forecasting and risk analysis…@RISK is a critical part of that process.”

Read the case study here.
 

See also: Palisade's Risk Analysis Solutions at Work in China

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Palisade Software Aids Business and Research in Japan

First Palisade made its mark in China--now we're establishing success in Japan. Two recent case studies detailed the use of Palisade's @RISK software by both a major Japanese company, Hitachi Solutions East Japan, and a researcher at the University of Tokyo illustrate how our easy-to-use software can benefit businesses and academics across the world.

The Hitachi case study details how executives at the manufacturing company used @RISK Developer Kit to analyze supply chain and inventory management. They created a stand alone graphical user interface to visualize production and inventory conditions, while also incorporating @RISK’s excellent risk analysis functions. @RISK’s Developer Kit made it easy to tailor the program to Hitachi’s needs and desires.

At the University of Tokyo, Professor Katsuaki Sugiura at the Laboratory of Global Animal Resource Science used @RISK to  improve the surveillance program for bovine spongiform encephalopathy--otherwise known as mad cow disease, in beef production in Japan.

Read the case studies in English here and here.

Both of these reports are available in Japanese on the Palisade website:

See also: Palisade's Risk Analysis Solutions at Work in China

o improve the surveillance program for BSE in beef production, - See more at: http://blog.palisade.com/blog/risk-and-opportunity#sthash.0W8NnwG8.dpuf
o improve the surveillance program for BSE in beef production, - See more at: http://blog.palisade.com/blog/risk-and-opportunity#sthash.0W8NnwG8.dpuf

 

 

ta and risk analysis of supply chain management, production, and sales & inventory planning and management. Analyzing these elements can be tricky, particularly when it requires forecasting demand and prices of raw materials. Using the @RISK Developer kit, Planning Department Research Division Head Masaru Tezuka and his team were  able to do these analyses. - See more at: http://blog.palisade.com/blog/risk-and-opportunity#sthash.0W8NnwG8.dpuf
ta and risk analysis of supply chain management, production, and sales & inventory planning and management. Analyzing these elements can be tricky, particularly when it requires forecasting demand and prices of raw materials. Using the @RISK Developer kit, Planning Department Research Division Head Masaru Tezuka and his team were  able to do these analyses. - See more at: http://blog.palisade.com/blog/risk-and-opportunity#sthash.0W8NnwG8.dpuf

 

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Palisade's Risk Analysis Solutions at Work in China

Palisade is establishing a robust presence in China. Recently, Palisade published two new case studies from the country; one details how the Shanghai Food and Drug Administration uses @RISK software for risk and decision analysis in food safety  and risk assessment. Specifically,  @RISK has helped the Shanghai FDA carry out exposure assessments of chemical and biological contaminates, as well as analyzing surveys of data on residents’ expenditure on various foods. In one case, @RISK helped asses nitrite contamination risk for cooked meats, in another, it aided in evaluating the likelihood of vomitoxin contamination of wheat products. With these and many other successes, the Shanghai FDA has been able to implement effective risk management recommendations.

The other Chinese case study details how @RISK and the DecisionTools Suite have been used in Professor Li Mian's research and his graduate-level engineering course at Shanghai Jiao Tong University. Prof. Li 's research includes complex engineering system design and optimization, decision-making and optimization theory.

Both of these reports also appear in Chinese on the Palisade website:

Read the case studies in English here and here.

See also: Palisade's Risk Analysis Software Ensures Shanghai Food Supply is Safer Palisade's Decision Tools Used At Shanghai's Top University

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2013 Palisade Risk Conference Series - Three stops coming up in November: Paris, Milan and Las Vegas

We have three cities left to go in our 2013 Risk Conference Series - Paris, Milan and Las Vegas! We have spanned the globe and stopped in 11 cities in the past 7 months. Last week at our Moscow Risk Conference we were able to present our latest versions of @RISK and the DecisionTools Suite programs which have been completely translated into Russian. According to Craig Ferri, Palisade's EMEA & India Director, "The speakers were of very high standard, and attendees were excited about the software and looking forward to being able to download the presentations. It was a great success and we look forward to new partnerships in Russia."

2013 Palisade Risk ConferenceThe Moscow conference, as well as the others in the 2013 Palisade Risk Conference Series, are beneficial for both novice and experienced users of our risk and decision analysis products. If you are a new user and unfamiliar with @RISK and the DecisionTools Suite, we invite you to see why 93% of the Global Fortune 100 are using Palisade products to make better decisions. If you are an existing user, this is your opportunity to network and be exposed to some useful hints and tips to get more out of our software.

In general, Palisade software enables clients to be more confident in the decisions that they make, in a wide variety of industries and applications. Clients use Palisade software in industries ranging from oil & gas, mining, and finance, through to utilities, insurance, and banking, along with government, manufacturing, and logistics. So, if one of your responsibilities is to create or base decisions on a credit risk analysis, financial risk analysis, or maybe a pharmaceutical risk assessment, or if you are looking to improve your project risk management strategies, we invite you to join us in one of the following cities to learn how other people utilize our software.

Palisade Conférence régionale sur le risque
Paris - 12 novembre
Voir le programme - Inscription

Palisade Regional Risk Conference Milan
Milan - November 14th
View Schedule - Register Now

Palisade Regional Risk Conference Las Vegas
Las Vegas - November 20th-21st *
View Schedule - Register Now

* 2-day event with 4 tracks for each day.

 

Previous 2013 Palisade Risk Conferences

An advantage of our software being available in 8 different languages is the Palisade's ability to provide risk analysis services throughout the world. The following is a list of the cities Palisade Risk Conferences were held this year. If you missed us in a city near you, be sure to look for us in 2014!

 

See also: Palisade Global Risk Conferences Advance Best Practices in Risk Management

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2013 Palisade Training Opportunities: Make Better Decisions with @RISK and the DecisionTools Suite

Now that the new version 6.2 is available, it is a great time to join us for one of our last few trainings scheduled on our calendar for 2013! Or maybe a live web training may be a better fit for you? Either way, you will learn how to incorporate @RISK and the DecisionTools Suite into your day to help you make better decisions.

For almost 30 years, Palisade software and solutions have been used to make better decisions. Cost estimation, NPV analysis, portfolio analysis, operational risk registers, insurance loss modeling, reserves estimation, schedule risk analysis, budgeting, sales forecasting, and demand forecasting are just some of the ways in which Palisade software tools can be applied.

By attending a Regional Seminar, you can learn how to apply @RISK and the DecisionTools Suite to real-life problems. All courses include complimentary materials with dozens of example models, plus lunch and breaks. Professional development credits are available, including CPE, PMI, and AACEI.

By the end of a 2-day course, attendees should be able to perform defensible risk assessments using @RISK software. The 3-day course covers the other products in the DecisionTools Suite, including PrecisionTree, RISKOptimizer, Evolver, TopRank, StatTools, and NeuralTools.

 

Decision-Making and Quantitative
Risk Analysis using @RISK and the DecisionTools Suite

 

EMEA and India

London - Oct. 22-24Mumbai Training
Johannesburg - Oct. 29-31

Oslo - Nov. 19-20
Mumbai - Nov. 25-26
London - Dec. 3-5

Milan - Dec. 10-12
 

US and Canada

Denver - Nov. 6-7 

Los Angeles - Dec. 3-5

 

Australia
Perth - Nov. 20-21  
 

Evaluación de Riesgos en Proyectos de la Industria de la Construcción e Infraestructura
 

Latinoamérica
México D.F - 3 al 5 de diciembre  

 

Avaliação do Risco para Usuários @RISK e Decision Tools Suite

Brasil
Belo Horizonte - 23 - 25 de outubro
Curitiba - 23 - 25 de outubro

Brasília - 6 - 8 de novembro
São Paulo - 20 - 22 de novembro

 

» Register for a Palisade  training seminar 

 

 

Live Web Training

Live Web Training is delivered by an expert instructor via an interactive web session and telephone conference. Course notes and examples files are emailed to you. With online training you can avoid travel time and costs while still interacting with the instructor and group.

Decision-Making and Quantitative Risk
Analysis using @RISK, Part I

October 31 - November 1

Decision-Making and Quantitative Risk
Analysis using @RISK, Part II

November 14-15

Decision Making and Quantitative Risk Analysis
using the DecisionTools Suite, Part I

December 9-10

Decision Making and Quantitative Risk Analysis
using the DecisionTools Suite, Part II

December 19-20

» See the Live Web Training schedule and register today

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Palisade's Monte Carlo Simulation Software Featured in Quality Magazine

Palisade Corporation got a shout-out in the August edition of Quality Magazine, a monthly business publication serving the quality assurance and process improvement needs of more than 64,000 manufacturing professionals. The article, “Simulation City” by Michelle Bangert, discusses Monte Carlo simulations and how they can be used in a variety of industries and situations.

Randy Heffernan, Vice President of Palisade is quoted in the story, explaining why companies use simulation software. “A lot of times, it comes out of a larger cost-cutting or waste reduction at the company as well as quality improvement,” he said in the piece. He goes on to explain that software like @RISK can help reduce material waste and the time, and that the cost and availability of a material can have a huge impact on production. “The risk of not having what you need when you need it is big,” Heffernan said. “But this is not intuitive…There is an assumption that raw material is just there waiting for you. But that’s not really true.”

The article continues, “with global supply chain issues caused by the floods in Thailand a few years ago or the tsunami in Japan, more people are becoming aware of the supply chain risks and the related quality of manufacturing. 'How do you maintain quality in the face of uncertain suppliers?” Heffernan asks. Though companies can find backup suppliers, they don’t want to use too many in order to maintain economies of scale. This is where software can step in to help find a solution.'”

The software can provide models using three different suppliers, such as sourcing 70% from supplier number one and seeing the uncertainty level.  “Software can do those calculations for you,” Heffernan said. “There’s no way people can do that manually.”

Read the original article here.

See also: "Risk Analysis Will Drive Better Decisions Across the Supply Chain" in Supply Chain Digital magazine

 

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Palisade's Decision Tools Used At Shanghai's Top University

Palisade prides itself of software tools that can be easy to use and multi-use. Professor Li, of the University of Michigan – Shanghai Jiao Tong University Joint Institute, provided some enthusiastic feedback on Palisade products in a recent case study.

Prof. Li 's research includes complex engineering system design and optimization, decision-making and optimization theory. Li uses Palisade's @RISK tools into his research and courses at Jiao Tong University. In his research, Li routinely uses @RISK, PrecisionTree, TopRank, and StatTools to do specific calculations in system design process, enabling him to analyze his ability to guarantee original design performance while changing different variables. He also uses the tools to perform decision analyses for system users.

Li says that he compared @RISK to other research software on the market, including Matlab. While Matlab and similar software offer some of the risk and decision analysis functionality found in Palisade’s software, researchers have to add their own code to access this level of functionality, taking considerable effort and time. In contrast, Palisade risk and decision analysis software simplifies these functions so that they are easy to use, and allows the creation of comprehensive data models.

Using DecisionTools for Product Pricing and Engineering Design
Prof. Li gives two examples on how the software is used in his teaching and research. The first involves a study of pricing risk and decision-making when introducing a new product to the market. Many factors affect the price of a new product, such as raw material and production labor costs. Li wanted to determine how large an impact these factors would have on a product's final price. Using Monte Carlo simulation, Li was able to find the relative influence of each variable. The whole approach was simple and intuitive. In another example, Li used the software to determine the influences of various factors on tolerances in car engine design. By using Palisade’s DecisionTools Suite, Li was able to save a lot of time, completing the procedures with just two or three commands.

Short Learning Curve
Prof. Li has found that the DecisionTools Suite enables students to perform highly flexible case analysis and decision analysis of any issues that may be encountered in a system. Students are able to grasp a number of related concepts with greater ease, while gaining powerful tools to facilitate solving practical problems. In Prof. Li’s research, Palisade has provided excellent support for the calculations and optimization required in areas like engine design and decision-making support theory, thus saving huge amounts of time and effort. Says Prof. Li, "You can now complete what originally took you 20 hours to do in as little as a single hour!"

Read the original case study here.

This case study is also available in Chinese: 上海交大开设DecisionTools 和@RISK软件课程并获得成果

See also: Some Uses of Decision Support Software

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Palisade's Risk Analysis Software Ensures Shanghai Food Supply is Safer

Palisade’s technology has been busy overseas, helping to keep millions of people safer from food and pollutant contamination; The Shanghai Food and Drug Administration monitors the safety of the production, circulation and consumption of food, drugs, health supplements and cosmetics for Shanghai, a city with over 20 million residents. Since 2007, the Shanghai FDA has been using Palisade’s @RISK software for risk and decision analysis to monitor contaminants and assess food safety risk in food service. Tian Mingsheng, Inspector and Chief Physician of the Shanghai FDA, explained in a recent case study how @RISK has benefited Shanghai’s food supply.

@RISK has helped the Shanghai FDA carry out exposure assessments of chemical and biological contaminates, as well as analyzing surveys of data on residents’ expenditure on various foods. Overall, the software “has played an indispensable role in the efficient development of food safety monitoring at the Administration, helping guarantee the safety of the food Shanghai residents consume,” writes Mighsheng.

Prior to using @RISK, the Shanghai the FDA relied on mean averages to calculate average risk exposure, which didn’t allow for accurate, quantitative exposure assessments for sensitive groups or highly exposed populations, leaving no way to describe the formation and development trends behind a risk. It also hampered the formulation of effective countermeasures to protect these sensitive groups. Thus, there was an urgent need for effective risk evaluation and assessment software.

In 2007 the Shanghai FDA decided to try Palisade’s @RISK software to tackle these issues. The results were excellent: a nitrite contamination risk assessment for cooked meats, cadmium contamination exposure assessments, a vomitoxin risk assessment for wheat products and a risk assessment for bacillus cereus contamination in rice, completely overcoming previous setbacks. The Administration also carried out analyses on vibrio parahaemolyticus contamination in seafood and listeria contamination in refrigerated ready-to-eat meals with excellent results to make effective, needed risk management recommendations.

Mingsheng says, “with @RISK, the Shanghai FDA has been able to eliminate its old-fashioned, backward risk assessment and evaluation methods, and find patterns even at the micro level, finding, for example, patterns and risks in chemical and biological contamination, with important implications for maintaining food safety for Shanghai residents.”  

Read the full case study here.

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Risk Analysis Helps Keep Things Sane: Managing Mad Cow Disease in Japan

Bovine spongiform encephalopathy (BSE), is not something you want to catch. Commonly known as ‘mad cow disease’, it's a progressive and fatal nervous disease found mainly in adult dairy cattle and caused by consuming abnormal prion protein. BSE is particularly worrisome because it can be transmitted to humans via meat-and-bone meal (MBM). The disease has a long incubation period, from 2-8 years with a 5 year average.

Japan is on high-alert for the disease. The first case of BSE in Japan was confirmed in September 2001, and ever since, all cattle slaughtered for human consumption have been tested for the disease. However, if a cow is infected, it cannot be detected unless it is just before the onset of the disease. The test cannot detect the infected cattle that are slaughtered or have died from other causes (“fallen stock”) before the end of the incubation period. Since the incubation period is long and varies between 2 and 8 years, the age of clinical onset is not fixed, and the age at which cattle may die or be slaughtered varies.

To improve the surveillance program for BSE in beef production, Professor Katsuaki Sugiura at the Laboratory of Global Animal Resource Science at the Graduate School of Agriculture and Life Sciences, the University of Tokyo, used Palisade’s @RISK to conduct Monte Carlo simulations and build stochastic models to conduct scenario analysis in predicting how changing the testing age of the cattle impacts the number of cattle tested and BSE infected cattle detected.

Four surveillance strategies were explored for beef cattle, with the minimum age at testing set at 0, 21, 31, or 41 months. Three surveillance strategies were explored for fallen stock, with the minimum age at testing set at 24, 31, or 41 months. Increasing the minimum age of testing from 0 to 21 months for both dairy cattle and Wagyu beef cattle had very little impact on the probability that a BSE-infected animal slaughtered for human consumption would be detected. Although increasing the minimum age at testing from 21 to 31 or 41 months would lead to fewer slaughtered animals being tested, the impact on the probability of detecting infected animals would be insignificant. The probability of infected Wagyu-Holstein crosses and Holstein steers being detected at slaughter or as fallen stock would be very low under all surveillance strategies.

Ultimately, thanks to Professor Sugiura’s work, the insights provided by @RISK enabled researchers to eliminate testing age as an important factor, which helped them focus on other, more effective factors in tracking BSE.

» Case Study: @RISK Helps Improve Mad Cow Disease Detection in Japan

See also: Unsafe Seafood? Monte Carlo Analysis Finds Increased Cancer Risk Due to Arsenic-heavy Seafood

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Safe Food: Reducing Risk from Farm to Table

Lowering risk in food is a complex challenge, and is an area that government authorities and the food industry are ever-vigilant to address. Given negative impact food-borne illness can have on the population—such as sickness and, in some cases, death—minimizing risk at every turn is critical. The biggest challenge is examining  the risk that exists along the many stages food products must go through to get from the farm to the table. EpiX Analytics, a consultancy that works with a wide range of industries to lower risk, utilized @RISK in a partnership with the Royal Veterinary College at University of London  to launch a Postgraduate Certificate in Risk Analysis in Health and Food Safety.

Using Monte Carlo simulation, students were taught how to determine a range of possibilities, including the likelihood of bacterial contamination at different points of the food production chain, growth of bacteria in different conditions, conditions of transport and storage of food products, frequency of purchase/consumption of food products, portion of food product per person per meal or dose-response model for the bacteria found. Another lesson considered the cost-effectiveness of using seasonal vaccines on entire populations versus vaccinations used solely on individuals who are at a higher risk of infection.

It is gratifying to know that @RISK is being used to help train those who are doing work to benefit the overall health and well-being of people around the world.

» Read more about the University of London and EpiX Analytics' program

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