Transcript Presentation - VT-ASQ
Palisade Corporation Risk modeling and analysis in Excel
Dave Bristol, Eastern Region Sales Manager 800-432-7475 x333, [email protected]
http://www.palisade.com
Agenda
Palisade Corporation Overview What is risk?
Using Excel modeling to better understand how risk impacts our work
Palisade Corporation
Continuity and longevity: Palisade Corporation is now in its 28 th year as a provider of general purpose quantitative decision-making tools and services, boasting the same core development team since the initial release of @RISK: World Headquarters: Palisade Europe: Palisade Asia-Pacific: Palisade LTA: Palisade Japan: Ithaca, New York London, England Sydney, Australia Rio de Janeiro, Brazil Tokyo, Japan Sales, Marketing, Training/Consulting, and Ops/Fulfillment also have team members with 10+ years service time.
Palisade is proud to be employee owned.
Palisade Corporation - Education
Solid Academic Backing: Palisade products are used in curriculums at more than 100 MBA programs worldwide, as well as in thousands of other academic fields at the undergraduate and postgraduate levels.
Palisade software is the featured Monte Carlo simulation product in dozens of academic textbooks .
Allied with professional development organizations: Palisade is accredited as a PMI R.E.P.
or Project Management institute Registered Education Provider.
Palisade is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors.
Other alliances available as needed.
Thousands of companies worldwide in all areas of business and industry, including a majority of Fortune 500 companies amounting to hundreds of thousands of users, make productive use of Palisade software every day.
What is risk, exactly?
Vague term used in many ways by many people
In modeling, it can be positive (opportunity)
Uncertainty (estimate accuracy)
Variability (random or quasi-random)
Likelihood of occurrence, size of impact
Everybody knows about them!
Common “most likely” estimates are hedged
Software allows us to incorporate ranges into modeling
Where do we find risks to model?
Everywhere! (It’s a multi-tool, not a hammer)
Investment
Retirement
Currency/options/VAR/DCF/etc.
Insurance
Losses/premium pricing/choosing a plan
Energy
Futures pricing
Production capacity consumption projection
Manufacturing
Equipment lifecycle
Inventory Management
Pharma/Health Care
R&D
Disease transmission and response planning
DecisionTools Suite
Integrated risk and decision analytics
All products add-in to Excel & include XDK
@RISK – Simulation
RISKOptimizer and Evolver – Optimization
PrecisionTree – Decision Tree analysis
NeuralTools – Neural network prediction
StatTools – Statistical analytics
TopRank – Sensitivity Analysis
@RISK combines Monte Carlo Simulation with other statistical techniques to give you:
The relative likelihood of all possible outcomes to your model.
The impact of variation within uncertain inputs has on the outcomes of your model.
A breakdown of the key drivers in your model: What pushes profits forward? What leads to losses?
A better understanding of where to focus your mitigation resources.
Clear, user-friendly graphs and reports to communicate findings to decision makers regardless of statistical savvy.
RISKOptimizer - Functionality
Included with @RISK Industrial and DecisionTools Suite Industrial
Combines @RISK’s Monte Carlo simulation with genetic-algorithm based optimization
Allows for optimization of aspects of a distributed objective and solving of complex non-linear models
More robust than a deterministic optimization
Customers originally combined @RISK and Excel’s Solver for stochastic optimization
RISKOptimizer - Applications
Portfolio optimization and allocation
Project selection
Capacity planning and production optimization
Scheduling (job shop, manpower)
Bidding
Inventory management
Prototyping/component interaction
PrecisionTree - Functionality
Decision trees can be built directly in Excel
Allows for large-scale options models to be built over underlying models
Evaluate tree by standard tree calc, objective function, worksheet calc, macro, etc.
Can be combined with @RISK for stochastic decision tree analysis
Customers originally combined @RISK and DPL/DATA
PrecisionTree - Applications
Real Options
Exploration/Production
Game theory
Structural integrity planning
Resource management
Classification/evaluation
Diagnosis/treatment
NeuralTools - Functionality
Palisade’s first product to truly meld qualitative and quantitative analysis via Neural networks
Offers multiple neural network types and “BestNet” search to determine best network
Requires no neural network expertise
Verifies it’s own results with instant LiveUpdates
Analyze categorical data in concert with statistics
LiveUpdate works with RISKOptimizer to find optimal answers to questions based on your network
NeuralTools - Applications
Credit scoring/loan underwriting
Market pricing/prediction (energy, etc.)
Environmental analysis
Fraud notification
Counter-terrorism
Medical diagnosis/treatment
Drug efficacy
StatTools
Collection of statistical processes in Excel for data analysis without leaving the spreadsheet
Forecasting & Regression
ANOVA/Correlation/covariance
Non-parametric tests
Much more
Replaces statistical processes identified by our clients as unstable or inaccurate in Excel
Supports up to 16 million data points/variable
Created Excel 2007 before 2007 existed!
XDK for custom function creation
TopRank
Utility for sensitivity analysis in Excel
Determine which model inputs drive volatility
Can be used on *any* Excel model
Cut down on model-building time by identifying the factors that require distributions for simulation
Risk analysis and mitigation in moments – as well as elimination of supposed risks
@RISK for Project
Simulation modeling in MS Project
Add uncertainty to:
Tasks
Durations
Calendars
Resources . . . anywhere in Project
Risk-adjusted Gantt chart w/criticality and cruciality
@RISK6 will blend @RISK for Excel and @RISK for Project into a single unified application for cost/schedule risk analysis.