@RISK Quick Tips: Asset Price Random Walks and Options Valuation.

@RISK risk modeling software is used for a wide variety of applications in financial risk analysis forecasting, investments, and banking. This model is one example of how @RISK can help in risk analysis decision making. Models of the prices of assets (stocks, property, commodities) very often assume a random walk over time, in which the periodic […]

@RISK Quick Tips: Discounted Cash Flow (DCF)

@RISK risk modeling software is used for a wide variety of applications in financial risk analysis forecasting, investments, and banking. Below is an application of a discounted cash flow analysis. Discounted cash flow (DCF) calculations are a frequent example of the use of @RISK. In the example model, the sources of risk are the revenue […]

@RISK Six Sigma calculator models the performance of a process with uncertain elements

Developed using the Six Sigma features of @RISK, software for risk analysis using Monte Carlo simulation Palisade’s Six Sigma Calculator allows you to create a function that models the performance of a process with uncertain elements. It allows you to include uncertainty around design factors through the use of probability distributions. It was built by […]

Clear Legal Precedent for Dealing with Uncertainty

A recent U.S. Court of Appeals case is timely not only because it involves corporate liability for ocean pollution when everybody in this country is morbidly tracking the BP spill in the Gulf but because it is a case in which the judge highlights and corrects some common misconceptions about Monte Carlo simulation.   In […]

Value-Based Management Compensation

Full disclosure: I am, like so many of my friends, an investor––a small-time one–and recently, I have joined in the public outrage about bankers’ bonuses and executive compensation in general. Compensation is one of the hot buttons in the debate over financial reform.  I keep wondering why compensation practices are what they are and how they […]

@RISK Quick Tips: Running multiple risk analysis simulations to see how changes in model variables affect simulation results

Example Model: SENSIM.XLS Sensitivity analysis in @RISK (risk analysis software using Monte Carlo simulation) lets you see the impact of uncertain risk analysis model parameters on your results. But what if some of the uncertain model parameters are under your control? In this case the value a variable will take is not random, but can […]

Free Webcast This Thursday: “DMAIC and Using a Non-Intuition Approach”

On Thursday, June 10, 2010, Ed Biernat will present a free live webcast entitled. "DMAIC and Using a Non-Intuition Approach" Experience is often critical to good decision making.  It helps us see patterns and react quickly.  In that sense it is a strength.  However, if the environment changes radically, and we use the old paradigms […]

Health Care Management: Decision Making at Two Levels

Reading recent reviews of two books on healthcare caused me to realize that in spite of the rapidly increasing number of clinical studies that use risk analysis and neural networks to sort out the best treatment choices, there has been very little published on how to use quantitative tools like decision trees and Monte Carlo […]