The July 14th issue of E-Commerce Times features an article by Palisade's Randy Heffernan about the importance of understanding risk factors in the technology sector, and planning strategies accordingly.
"Tech mainstays and startups alike now require a clearer forecast of a project's probability of success or failure," writes Heffernan. "Clearly, the margin or error has drastically shrunk, and organizations are paying greater attention to analyzing the risks associated with each project, investment and acquisition."
Heffernan gives recommendations about identifying and communicating current external and internal risk factors, and outlines how Monte Carlo simulation and computing risk can help.
» "Knowledge Is Power: Embracing Risk Analysis," in E-Commerce Times
The ongoing debate about the feasibility of offshore windfarms as a renewable energy source continues to generate discussion and headlines.
A key issue for potential operators is that offshore windfarms face more adverse weather conditions, such as higher wind speeds and the increased risk of being struck by lightning, than their onshore counterparts. In addition, a failed offshore turbine may take several months to repair, rather than a few days. The financial implications of repair and downtime must therefore be factored in to any calculations related to the feasibility of the operation.
This is made more difficult due to the inherent level of uncertainty involved. For example, the nascent nature of the industry means there is a shortage of historical data on the failure frequencies of the turbines. Even information that is available is subject to uncertainties – such as the prices of crane ships and access vessels (which may vary per season and even from day-to-day), the cost of spare parts, and the electricity price, as well as the lead times of spares and vessels.
However, using @RISK (Palisade's Microsoft Excel software add-in for risk analysis using Monte Carlo simulation) for probabilistic analysis, the Energy Research Centre of the Netherlands has developed an innovative approach to determine whether offshore wind farms are financially viable from an operations and maintenance perspective. The @RISK risk simulation software model produces a distribution that determines the uncertainty associated with the downtime and maintenance costs of an offshore wind farm. This enables a project developer to make an informed decision, firstly as to whether to proceed with the project and then, if this is affirmative, the best way to do so.
Measuring the uncertainty also helps to make the project more viable in terms of financing. With the help of @RISK, wind farm developers – and their potential investors – can make informed decisions about whether an offshore operation will offer a good return on investment.
» Case Study: ECN uses @RISK to determine the economic feasibility of offshore wind farms
New DecisionTools Suite version 6.0 includes a wide range of improvements, including powerful new integration of @RISK with Microsoft Project that allows you to perform risk analysis and Monte Carlo simulation on your Microsoft Project schedules – all from the @RISK for Excel platform! @RISK also adds simulation of time series models, easier-to-understand tornado charts to identify risk drivers, better graphing options, improved distribution fitting, and new distribution functions.
But there’s more to DecisionTools Suite 6.0 than just @RISK. PrecisionTree 6.0 adds powerful Bayesian revision and the ability to insert nodes anywhere in a tree. RISKOptimizer and Evolver 6.0 now include the OptQuest solving engine for even faster solutions on many types of models. RISKOptimizer, which has always shared functions with @RISK, is now even more tightly integrated with @RISK for seamless modeling. And StatTools and NeuralTools have added improvements to scatter plots and sensitivity analysis to the testing of neural nets.
» See What’s New in DecisionTools Suite 6.0