Case Studies

@RISK and the DecisionTools Suite are used across industries, including Finance & Banking, Oil & Gas, Mining, Insurance/Reinsurance, Manufacturing, Healthcare/Pharmaceutical, and Academia. See more at http://www.palisade.com/cases/

CONTI Uses @RISK for Shipping Success

CONTI-Group has been a leader in the shipping industry since 1970, operating a large, deep-sea fleet in Germany as well as being an established global provider of ship investment funds.  With commercial shipping being one of the most economical and ecological modes of transport for cargo, tangible shipping assets, including tankers and carrier vessels, represent an important form of financial investment.

After the financial crisis of 2007-2008, the European Union introduced new requirements for better regulation and supervision of the financial sector.  These objectives aimed to introduce a new level of protection for investors by regulating and supervising all markets, and included the provision of quality and transparency in all capital market investments.

CONTI-Group was already unique in its reputation for financial transparency, but when these regulatory requirements for visibility were introduced, CONTI began using Palisade’s @RISK to construct financial models that capture and assess potential risks in the fluctuating shipping market.  This has enabled the company to provide higher levels of transparency to its investors, successfully steer its shipping fleet, and subsequently generate above-average results on its investments.

“We wanted to find a risk management solution that would comply with the requirements of the new regulations, while  also providing us with an even better way of tracking and managing financial risks,” explained Martin Stobinski, Managing Director for Risk Management, Compliance and Asset Valuation for CONTI KVG.

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@RISK Used to Prepare Hospitals for Hurricane Strike

Due in part to the significant impact of hurricane season on the Gulf Coast of the U.S., Louisiana is considered a “wet lab” for emergency preparedness. As part of its annual preparations, the State creates and maintains plans that involve the full coastal evacuation of entire hospitals and nursing homes in Southeastern Louisiana, mostly via aircraft. Palisade’s @RISK software plays a critical part in both estimating needs, and justifying resources.

Risk and Decision “Palisade built a sophisticated model for us that allows us to take the configuration data and construct a model, quickly and easily,” said Henry Yennie of the Louisiana Department of Health (LDH). “@RISK is a really valuable tool that lets us perform up to 10 different scenarios based on patient numbers and other data, plus it has an interface that makes it ‘idiot proof’ for us.” For each scenario, modelers can change evacuation parameters such as airport and plane availability, or patient bed availability.

LDH worked with Palisade’s Custom Development team to create the model. A custom interface allows for easy configuration of model parameters, reducing errors. The LDH can plan ahead of time, and change parameters on the fly during a hurricane to plan during an actual hurricane. According to Yennie, “@RISK gives us benchmarks we can measure against actual patient movements, then lets us know the probabilities of success. By providing us with this estimate of success throughout the process, we’re able to figure out what we can do to fix it right away.”

“I’ve used other simulation software over the years and none has come close to the usability of @RISK,” reports Yennie. “It makes it really easy for a person who doesn’t have a PhD in statistics to build an accurate model of a real-world situation that has an impact.”

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» Learn more about @RISK
» Palisade Custom Development

L.E. Peabody uses @RISK for Strategic Decisions at Electric Power Generating Facilities

Real option valuations are used by existing or prospective owners of power plants to support acquisition, divestiture, development, or retirement decisions.  Owners of power plants also use real option valuations to support capital decisions, such as the installation of environmental controls, the expansion of plant capacity, or equipment to improve efficiency.

L.E. Peabody & Associates, Inc., an economic consulting firm, specializes in supporting economic decisions around electric power generating facilities or “power plants.”  The company uses Palisade’s @RISK software to measure a power plant’s real option value and define a power plant’s risk profile.  Monte Carlo simulation is applied to simulate a power plant’s economic dispatch into uncertain power and fuel prices, thus helping the firm show current and prospective plant owners the full range of possibilities around strategic decisions.

“@RISK allows our firm to easily and comprehensively develop real options analysis for our projects that involve market uncertainty,” says Brian Despard, Vice President with L. E. Peabody & Associates. “As an Excel add-in, it integrates seamlessly into our various spreadsheet models. @RISK’s selection of distributions and functionality provide us with more than enough flexibility to develop our quantitative analyses.”

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Amway Improves Capacity Planning with @RISK and Palisade Custom Services

amwayLogo.pngWith $10 Billion in annual sales, 450 different products, 18 different plants and selling in more than 100 different countries, Amway‘s operations are vast and complex. Faced with a planned expansion that eventually added five new manufacturing sites, the Industrial Engineering team wanted to find a solution that required less time for data collection, thereby providing more time for critical analysis. So they partnered with Palisade and its Custom Development team to design a new interface and customize Amway’s Excel-based models, using @RISK in the background to power analyses. The result is a custom application Amway calls the Long Range Capacity Planning (LRCP) tool.

Users across the company were trained on how to use the LRCP tool. Plant managers and capacity experts can enter changes to variables such as demand, output rates, new products and run sizes in real time for a selected plant, and then run up to 20 different “what-if” scenarios individually or in combination and see results almost instantly. Results can be studied on their own or displayed alongside existing baseline scenarios for comparison.

Amway’s new tool has already proven its worth across the company, from both the Plastics and Liquids departments, where it was used to determine the feasibility of shift reductions, to the Nutritional Products plant, where it showed the need for new capacity for a series of new products.

Amway Senior Principal Engineer Phil Miclea expects the demand for the LRCP tool to increase, saying, “When you can satisfy a customer’s curiosity in a single meeting, you’ve gained a fan, a believer and a person who is going to ask you to come to the decision-making table more often.”

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Palisade Risk Conferences 2017: Pharma/Biotech in Mass., plus Bogotá and London

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Join us in a city near you for an intensive conference on best practices in risk and decision analysis!

These events are free to attend and promise to be invaluable opportunities for broadening one’s knowledge of risk modeling, and networking with decision-making professionals in a range of industries.

Benefits of Palisade Risk Conferences:

  • Get more from @RISK and the DecisionTools Suite – get exposure to the latest techniques in risk and decision analysis so you can apply them to your own models.
  • Learn from experts – sessions are taught by Palisade’s consultants and trainers.
  • Networking opportunities – share ideas and speak with presenters, other attendees, and Palisade staff to gain valuable insight from many backgrounds.

Conference Dates:

Cambridge, Mass. – Pharmaceuticals and Biotechnology industry focus
March 7th, 2017
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Bogotá
March 9th, 2017
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London
April 27th, 2017
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See the full conference and workshop schedule.

From Boardroom to Courtroom: Using @RISK to Value Early-Stage Companies

pellegrino_associatesIntellectual property (IP) is one of the most valuable assets early stage companies own, and one of the many challenges faced by these companies with no assets other than untested technology is how to determine a fair market value for their IP should they face a civil lawsuit.  IP makes a huge contribution to local, national and global economies. Businesses rely on the enforcement of their IP, e.g. patents, trademarks and copyrights, while consumers use IP to ensure they are purchasing safe, guaranteed products. This is why it is important for organizations to protect and understand the value of intellectual property.

Pellegrino & Associates, a boutique valuation company with a specialty in software and IP, uses Palisade’s @RISK software to run Monte Carlo simulations for their risk analysis and to calculate fair IP values, based on discounted future incomes. The method is detailed in the book BVR’s Guide to Intellectual Property Valuation, by Michael Pellegrino, a leading expert in IP valuation.

“We’ve used it on more than 300 client engagements in every major sector of the economy, from software and semiconductors to chemical coatings and consumer electronics,” said Pellegrino. “We apply it to a range of damages models including the assessed value of a product, reasonable royalty payments, total cost of product reproduction, as well as the potential for lost profits – and in all the cases that went to court where we used Monte Carlo simulation, our results were accepted every time.”

» Read the full case study
» Learn more about @RISK
» Pellegrino & Associates
» BVR’s Guide to Intellectual Property Valuation

Integral Consulting Uses @RISK to Help Protect the Environment

integralconsultingcasemainSustainable ‘green’ practices have been a growing focus as individuals, corporations, and governments consider issues such as global warming, highly volatile markets, and urban sprawl.  For a Fortune 100 mining company, these concepts have become a key part of managing cleanups and hazardous waste sites to increase the environmental, social, and economic benefits of the cleanups.  The company needed to address acid mining drainage from large rock piles as well as the potential for rock slide risks at the site. The cleanup solution originally supported by the Environmental Protection Agency (EPA) and State was complete removal of the rock piles and transport to an offsite disposal location. However, this could take more than 20 years to complete, at a cost of approximately USD $180M. The solution would also increase hazards to the public through exposure to years of heavy truck traffic through small towns, and produce millions of tons of greenhouse gases.

Integral Consulting, Inc., a science and engineering firm that provides multidisciplinary services in the fields of health, environment, technology and sustainability, was hired by the mining company to assist with evaluating remediation (aka cleanup) strategies for a 100-year-old mine. The Integral team used Palisade’s @RISK to evaluate multiple strategies and select a solution that minimized environmental impact and achieved full regulatory approval, while enabling the client to save more than USD $100M. The company’s mission is to help clients across a wide range of public and private enterprises to identify technically sound, cost-effective and environmentally friendly solutions to complex problems.

“@RISK enabled us to do sensitivity analysis on each criteria, which helped us determine how specific uncertainties could drive different decisions,” explained Timothy Havranek, Principal Consultant for Integral Consulting. “It let us easily identify which choice was optimum for our client, for the community and for the environment.”

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» Learn more about @RISK
» Integral Consulting, Inc.
» Environmental Protection Agency (EPA)

@RISK Models Cancer Risks of Carcinogen Intake from Food and Beverages for Canadians

universityofvictoriaWhile news headlines regularly report on acute health issues relating to food and beverages, such as E. coli outbreaks and salmonella poisoning, very little is known about the adverse health issues caused by the longer-term intake of contaminants in those foods and beverages – including carcinogens. The University of Victoria (UVic), a national and international leader in many areas of critical research, participated in the CAREX Canada Project, funded by the Canadian Partnership Against Cancer, to better understand the environmental and occupational exposures to substances associated with cancer, and subsequently provide support for exposure reduction strategies and cancer prevention programs.

The UVic team used @RISK, Palisade’s risk analysis software, to model differences in Lifetime Excess Cancer Risk for Canadians based on contaminants found in food and beverages. The results revealed notable differences in cancer risks for several different demographics, and are detailed in the thesis, Geographic Exposure and Risk Assessment for Food Contaminants in Canada, by Roslyn Cheasley, a Master’s student with the Department of Geography at UVic.

Palisade’s @RISK enabled the team to easily and effectively determine the concentration of carcinogenic elements in the identified food and beverage products, as well as learn if certain demographics were more at risk from dietary patterns than others.

“We decided to take things up a notch when we updated the data, and upgrade to a probabilistic analysis model based on Monte Carlo simulation,” said Cheasley. “We wanted to estimate the range and frequency of possible daily contaminant intakes for Canadians, as well as associate these intake levels with lifetime excess cancer risk. This is where @RISK came into the equation.”

» Read the complete case study here
» Learn more about @RISK
» University of Victoria (UVic)

@RISK Manages Operational Risks in the Green Supply Chain

graphicerauniversityAs the public becomes more aware of environmental issues and global warming, consumers are asking more questions about the products they purchase. This has resulted in a growing number of companies considering the move to green supply chain management (GSCM) and integrating environmental thinking into their supply chain management.

“Many companies are concerned that changing their established processes and implementing a green supply chain could result in lower quality products, delayed shipments, or even a loss of business,” explained Dr. Sachin K. Mangla of the Indian Institute of Technology Roorkee and Graphic Era University – Dehradun.

“Going green” can be a complex transition from an operational perspective, and not all companies are convinced that improved environmental performance will lead to financial gains. As green supply chain (GSC) considerations typically introduce different operational activities and processes to the supply chain, they also create new uncertainties and risks which can have a significant impact on a manufacturing-based business.

Dr. Sachin K. Mangla with Graphic Era University-Dehradun used Palisade risk analysis software @RISK to identify and evaluate the operational risks of implementing a GSC for a well-established plastic manufacturing company in India. The results generated a wide variety of possible risk scenarios, as well as associated probabilities. “@RISK enabled us to not only predict the type of risks that could happen, but also anticipate what risks were most likely to happen,” said Mangla. “This enabled us to create a model that provides companies with visibility into the potential ecological-economic gains of a green supply chain, as well as recommendations to best manage the operational risks.”

» Read the complete case study here
» Learn more about @RISK
» Graphic Era University – Dehradun

Patrick Engineering Uses @RISK for Cost and Schedule Risk on MBTA Project

PatrickEngineeringPatrick Engineering, a nationwide U.S. engineering, design, and project management firm, provides independent cost estimating, scheduling, and risk analysis services for the Massachusetts Bay Transportation Authority (MBTA). Given the uncertainty of cost and schedule duration estimates, the best way to display them is with probability distributions. Patrick Engineering uses @RISK to assess cost and schedule contingency needs based on project or program risks.

Patrick worked on the Downtown Crossing Vertical Upgrade project recently, part of the MBTA’s program to upgrade elevators and meet accessibility requirements of the Americans with Disabilities Act. The first step for the project was risk identification. “To do this, you need to work collaboratively with the client, with the designers, with the project management team, with anyone who will have insight into the project – you want them all involved,” explains Kim Kozak, Sr. Project Manager for Patrick Engineering. The full team for the Downtown Crossing station project included six organizations and approximately 20 team members.

From here, Patrick Engineering holds a Quantitative Risk Workshop with all the players. “We try to get people thinking, to encourage discussion, as even a small detail could lead to a giant risk,” said Kozak. “Similar to the situation with the Titanic – what seems like a minor detail could be enough to sink the entire ship.”

“The final results of Palisade’s @RISK models help us, and our clients, understand where projects could go – not where they will go,” explained Kozak. “And we know that if a risk does occur, we’re well prepared as we’ve already identified it.”

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