Risk Management

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.

Rusnano uses The DecisionTools Suite for Nanotechnology Investment Decisions

Rusnano private equity firm uses the DecisionTools Suite for Nanotechnology Investment Decisions

RUSNANO is a private equity firm focused on the development of the nanotechnology industry in Russia. Using government funds, it invests in nano projects that have significant economic or social potential, across a variety of industries. Having provided capital for a company, RUSNANO works with it for five to seven years to develop the business before it is bought by strategic investors.

The hi-tech nature of these enterprises means that RUSNANO often has to make an investment decision at the R&D phase, before a product is on the market. This introduces a high level of risk, so the company looked to the discipline of risk management, adopting a modern and comprehensive approach through risk modelling.

RUSNANO uses the complete Palisade DecisionTools Suite toolset, with a focus on TopRank and @RISK. The tools help RUSNANO to model projections of different KPIs on two management levels: portfolio management level and investee management level. This allows it to calculate the right value of investment based on the risk it entails and understand the overall liquidity of the portfolio using risk analysis.

Using Palisade’s tools, risk managers at RUSNANO can communicate uncertainty to the company’s senior executives; the key factors, risks and projects that have the most impact on the company and project KPIs. Modelling risks also helps RUSNANO to understand the different micro factors that are outside the control of the investment team. The insight provided is in-depth and indicates when the impact of those factors is potentially a significant threat, therefore requiring risk mitigation action planning and model changing accordingly for the portfolio or the project to be successful.

Netconomy Plans for Business Growth with Palisade’s @RISK

As the world continues to become ever more digital, companies from all industries need to have a strong digital commerce strategy. However, launching a digital commerce platform can be a complex undertaking, especially for established companies which have built their businesses on more traditional, paper-based processes that are better suited for ‘brick and mortar’ transactions. Netconomy Software and Consulting specializes in omni-channel and e-commerce software integrations, creating digital marketplaces for a diverse range of companies in the retail, wholesale, consumer, telco and transportation industries. This is where Netconomy has found its ‘sweet spot’: working with enterprise organizations to adapt and connect their business processes with state-of-the-art technologies to deliver scalable e-Commerce solutions. However, this is a fast-paced industry and the company is having to grow – and plan for that growth – rapidly.

For the first few years, the company utilized a classical budget process: taking a couple of months of the year to create a financial plan for the next year. However, this type of planning process has become less effective for Netconomy since the company is developing so quickly.  The company needed a planning process that would combine risk management with its budgeting and forecasting.

Now, the Austrian-based company uses Palisade’s @RISK to integrate risk management within its budgeting and financial planning processes, providing the management team with full visibility of the risks associated with each element of its budget. This in turn enables the company to make better, more informed decisions regarding capital expenditure, investment planning and future growth strategies.

Netconomy graph

» Read the full case study

@RISK and DecisionTools Suite 7.5 Now Available

The latest version of our popular risk analysis tools, @RISK 7.5 and DecisionTools Suite 7.5 are now available!  Version 7.5 offers a range of improvements for any decision maker, from general use enhancements to new, specialized analytical features.  New and enhanced graphing options, faster performance, and sophisticated analytics make DecisionTools Suite 7.5 the only decision analysis toolset you’ll ever need.

Read What’s New

Register for a free webinar on What’s New in @RISK 7.5

Key Features Include:

  • New and Improved Tornado Graphs In @RISK
  • Faster Optimization with RISKOptimizer
  • Over 20 New @RISK Functions
  • Graphing and Reporting Improvements in @RISK
  • Optimized for Windows 10 and Excel 2016

Other Important Features:

  • Run Optimizations During Simulation Without Coding
  • New StatTools Analyses

Join Us for a Free to Learn More About What’s New In @RISK 7.5 and DecisionTools Suite 7.5!

» Wednesday, July 20th, 1pm EDT (NYC) | 10am PDT (Los Angeles) – Register

» Thursday, July 21st, 10am EDT (NYC) | 3pm BST (London) | 7:30pm IST (Delhi) – Register

» Wednesday, July 27th, 10am AEST (Sydney) – Register

Don’t Forget the Unknown-Unknowns: Palisade Client’s Article Tackles Uncertainty

Palisade customer Andrew Rudin, of Contrary Domino Partners, was recently featured in Customer Think, a global online community of business leaders covering customer experience and social business. Rudin’s piece comes in three parts:

Revenue Uncertainty – Part 1: Known Unknowns, Unknown Unknowns, and Everything in Between,”  discusses the multi-faceted aspect of risk.

Revenue Uncertainty Part II: Putting Uncertainty to Work at Your Company,” explains how to harness probabilistic tools to counteract the qualitative and subjective influences of human opinion in evaluating risks in a company.

“Revenue Uncertainty – Part III: How to Model Revenue Risk,” concludes the series with information on how to use statistical models and Monte Carlo analysis to develop a more realistic vision for revenue achievement under a set of assumptions or conditions.

Interested?  More info on these informative pieces below:

In the Part I of the series, Rudin asks, “How do vendors sort through the universe of data, artifacts, anecdotes, and information to develop sufficient knowledge to place bets intelligently?” He recommends parsing out the uncertainty into three categories—the Known-Known’s, the Known-Uknown’s, and the Uknown-Unknown’s. “In the last twenty years, we’ve made great strides in adding to the corpus of known-known’s, and we’ve come a long, long way in learning how to discover the known-unknown’s. But we’re still left dangling, because we know that categorization only takes us so far. We still must answer, “now what?” And for that, we need mathematical rigor,” Rudin explains in his piece.

In Part II of the series, Rudin describes how bringing quantitative risk management can be difficult: “This yin-yang of risk seeking and risk aversion between and within individuals creates immense organizational challenges because people – not algorithms – still make most of the high-level, strategic decisions in an enterprise. And executives suffer a love-hate relationship with uncertainty by sometimes confronting it, sometimes sweeping it under the rug, and sometimes, doing both.”

In his final installment, Rudin discusses how companies can better plan for risk by using distribution models, running Monte Carlo simulations and looking at the different potential scenarios, and asking additional questions after examining the probabilistic data. “After all, what could be easier at the outset than pointing toward a revenue hill and encouraging your team to go take it?” Rudin writes.  “But risk modeling will help you figure out whether there are any obstacles in between, and it will enable you to understand and estimate their magnitude. That insight will help you get past them, better ensuring your success.”

Check out Rudin’s blog here, and read Rudin’s advice on how companies can apply mathematical rigor to their uncertainty (hint, statistical probability—our specialty—is part of the solution).

Reviewing Risk for South Africa’s Rail, Port, and Pipeline Projects

Transnet Turns to @RISK to Evaluate Capital Projects Risk in South AfricaManaging the delivery of all necessary goods within a country is not a simple task. It can require the careful coordination of ships, ports, railways, and pipelines to ensure that citizens, no matter where they are, get the goods and services they need. Expanding this system to accommodate more people and growth can be a daunting task, and requires careful analysis of the potential risks that could threaten the schedule, cost, and efficacy of the project.  Transnet, the primary freight logistics company in South Africa, relied on @RISK to assess the expansion of their infrastructure, using the software to better understand the risks that might arise during large-scale and complex capital projects.

Francois Joubert, National Program Risk Manager with Transnet Capital Projects (TCP), was charged with determining the key risks across the different projects in the TCP project portfolio. “It is a complex project environment…A project can be a like-for-like replacement, requiring a team of three people, costing less than $465,000, and have a duration of three weeks,” says Joubert, “or it can be a port infrastructure project with multiple stakeholders, costing $558M, involving 150 people, and requiring complex engineering and procurement which takes five years to complete.”

Using @RISK, Joubert was tasked to use the TCP’s  existing risk registers and identify the following:

  • Where in the risk break–down structure and project type do the most significant risks appear?
  • In which risk types and project types do the most significant risks appear?
  • What is the influence of project start delay risks on the project portfolio?

“Using specific @RISK functions…combined with a whole range of Lookup and SumIfs statements, some named ranges, and with conditional formatting, I was able to build a representative model,” Joubert explains.

The results have been presented to Transnet and are going to be used to identify the root causes of these portfolio risks.

Joubert says that Palisade software made this project possible. “It’s an excellent decision-making tool; it provides scientific, defendable numbers for contingency, risk ranking, etc.,” he says. “There are too many useful features to count—but its flexibility of use, particularly because it is Excel based—may be the most valuable.”

Read the full case study here.

Non-Profits None too Confident When it Comes to Risk Management

A few days ago, we discussed how major for-profit corporations admitted they aren’t doing all they can to manage their business risks. Turns out, non-profits aren’t confident they’re doing much better.

According to a June 2014 survey of 150 U.S. nonprofit foundations and endowments conducted by SEI’s Institutional Group, 44% of them are not confident that they are spending enough time assessing the impact of potential market shocks, and 49% don’t believe that their investment committee has identified all key portfolio risks. Nearly a quarter (24%) said they lack confidence that the committee is provided with enough information to conduct substantial risk analysis.

However, these nonprofits are recognizing the importance of risk management; 46% of those surveyed said “they place greater value on positive risk-adjusted returns than on overall portfolio returns when evaluating investment success,” and that “Managing the risk/reward balance is a huge priority.”

Non-profits can use software tools such as @RISK to quantify the magnitude and probability of risks in funding streams, and enhance risk management in portfolios. Risk analysis helps non-profits develop effective strategic contingency plans, and communicate challenges to board members and other stakeholders.

Major Corporations Lack Risk Management Strategies

Even the largest and most successful businesses have something to learn when it comes to managing risk.

Companies are working harder to identify potential risks to their business, but many still fail to incorporate those risks into strategic plans or inform the board of directors,” writes Wall Street Journal senior editor Emily Chasan.

In her article appearing in July 3rd edition of the WSJ’s CFO Journal section, Chasan discusses a survey of 100 senior financial executives done by APQC, a nonprofit business research firm.

The survey found that fewer than one in five executives say their companies effectively manage newly identified strategic risks, with most companies failing to implement procedures to lessen risk.

Two out of three companies in the survey (which included large public and private companies with global operations) said they do not have a process for ensuring that strategic risks are included in the company’s strategic plans, while 43% reported to not have an established method for reporting risk to their board.

Risk management software enables companies to take the guesswork out of big decisions and to plan strategies with confidence. Tools like Palisade’s @RISK are used across industries to identify and minimize risk.