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Decision Making and Enterprise Risk Management: The Plausible vs. The Probable

Christina Ray
Omnis

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Recent experience indicates that there is good reason to view the global financial system as a complex, adaptive, self-organizing network. As such, it can exhibit emergent behavior; that is, the rapid transformation to a new state in reaction to exogenous or endogenous events. In this presentation, Christina Ray contrasts the dominant world views of the financial and intelligence communities; that is, the world of the probable (a backward-looking view) and the world of the plausible (a forward-looking view). She discusses analytic methods for the generation of all plausible future scenarios, and how such methods enhance decision making and enterprise risk management.

 

Palisade Overview, and Risk in the Wrong Hands

Sam McLafferty
Palisade Corporation

Randy Heffernan
Vice Palisade Corporation

Palisade today stands at the forefront of risk and decision software analytics. With offices around the globe and an exciting new release around the corner, more professionals are making decisions today with Palisade software than ever before.

Palisade president Sam McLafferty will give an update on where Palisade stands in the field of risk analysis before going on to give a sneak peak of what’s coming in the new 6.0 release of @RISK and the DecisionTools Suite. You’ll see that you’re in good company as he reviews recent noteworthy partnerships with leading global corporations in fields such as banking, energy, and manufacturing. Then get ready for a demonstration of some of the remarkable new features in version 6.0 that will make risk modeling both easier and more accessible across platforms. Version 6.0 will be the risk modeling solution that anyone case use.

Following Sam’s presentation, Palisade vice president Randy Heffernan will continue the discussion by asking the questions you’ve undoubtedly been faced with: What is this risk analysis and why do I really need it? After all, risk management appears to have failed at many levels and even now companies are still trying to figure out how to grapple with risk. Randy will touch upon of the reasons for the failure of many risk management efforts, explore what happens if you ignore risk, and offer some simple quantitative solutions you can take with you back to your organizations.

 

Round Table Panel of Experts:
Best Practices in Risk Analysis

Rafael Hartke, Petrobras; Andrew Pulvermacher, BestBuy;
Roy Nersesian, Columbia University; Dr. Chris Albright, Indiana University

In the aftermath of the global financial crisis, more and more organizations have started to question how it could have been avoided. There has been greater scrutiny on the risk models used before and since 2008, with many assumptions being called into question. Monte Carlo simulation and other techniques are being re-examined, both to ensure they are being used properly, and to better understand how their wider use can benefit organizations at the enterprise level.

This panel discussion brings together experts from various fields to share their insights and expertise into the current state of risk analysis. Through a series of questions, each panelist will present his or her “lessons learned” in recent years, and what they are doing now, differently or the same as before. By talking through their ranges of direct experiences, the discussion will give the audience better understanding of the where the field of risk analysis is heading, as well as tangible ideas on how to address risks they face at home.

 

Application of @RISK on Contingency Reserves

Lyle Hervert
Black & Veatch

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As a company involved in the design and execution of hundreds of major capital construction projects, Black & Veatch is acutely aware of the impact of risk factors on the bottom line. Some risk factors are so significant and probable that funds must be held in reserve to protect the company from catastrophic losses. Other risks are less significant and\or have sufficiently low probability that reserving a percentage of the potential loss will offer enough protection.

The “art” is to understand the balance between adding in reserve funds for risk protection and not adding reserve funds for a competitive advantage in the bidding process. Until 2009, Black & Veatch struggled with anticipating and reacting to potential risks and market influences which tended to behave cyclically. As events such as weather, labor shortages, supplier interruptions and the like occurred, Company management tended to increase Contingency Risk funding into project proposals. Over succeeding years, business was lost due to the increase in Contingency reserves and as a result, the reserves were reduced to a point that losses increased from the impact of risk events and the cycle began again.

Through the application of risk modeling, including Monte Carlo analysis using @RISK, Black & Veatch has been able to better understand and predict the probability of the various risk factors. The increased accuracy and precision of the risk estimate has benefitted the company by improving the competitiveness of proposals while simultaneously protecting profits by appropriate reaction to identified risks. All major construction projects are assessed using this model with Senior Executive review.

For this conference, the model inputs and outputs will be examined in the context of the business environment as described above. The application of @RISK will be described and examples of projects will be presented.

Black & Veatch Corporation is a leading global engineering, consulting and construction company with Global workforce of approximately 8,100 and more than 100 offices worldwide.

 

Bottoms-up Forecasting with
Uncertainty using @RISK

Andre Lowe
Intel

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Intel Corporation's Embedded and Communications Group (ECG) delivers an enhanced IA technology portfolio for embedded and communications market segments. ECG is broken into four divisions, Embedded Computing Division (ECD), Low-Power Embedded Products Division (LEPD), Communications Infrastructure Division (CID) and Automotive Solutions Division (ASD). ECG's products are either Adopt (server, desktop, mobile), Modify (LV processors, mobile CPU, and server chipsets) and Create (system on a chip, San Clemente).

Forecasting for a new business is fraught with uncertainty. Lack of clarity regarding customer acceptance, volume ramps and ASP represent only half of the equation. Product mix, demand profiles and the resulting PNL implications are of keen importance to managers and executives; failing to comprehend the risks and ranges inherent in these forecasts can lead to poor decisions down the road. Conversely, range-based forecasts help managers prepare for the future.

In this presentation, we will explore a technique used inside ECG for “bottoms-up” forecasting.

 

Contingency Allocation for
Large Infrastructure Projects Using @RISK

Francisco Cruz and Mitul Parikh
PMA Consultants

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Risk Analysis is an important tool that has evolved over the years, and has become ingrained in the project management best practices. While Risk Analysis has been used predominantly in finance and insurance industries, its use in construction industry is maturing. As raising capital becomes increasingly competitive, organizations are looking at ways to optimize their cash reserves with the use of project management best practices.

Over the years, public agencies had been allocating contingency to the projects based on empirical methods. Recently, some agencies have embraced Risk Management as a tool to identify, qualify, and use quantitative risk models to determine risk based contingency. This presentation discusses the life cycle of a risk management process, which has been helping projects in reducing uncertainty and proper forecasting of total project costs.

The stakeholders involved in the Risk Identification meeting brainstorm threats and opportunities, which are then prioritized using Qualitative risk analysis. This prioritization is accomplished by considering multiobjective schedule and cost probability-impacts ratings along with Manageability. The top risks from the qualitative process are used for developing a quantitative schedule and cost risk model. The schedule and cost risk analysis results are integrated to calculate total Risk based cost contingency required by the project. Finally, the risk based cost contingency along with the project estimate are used for computing multi-year capital forecasting.

 

Deconstructing Wood Costs: A New Way to Manage/Hedge Wood Price Risk for Biomass Heat and Power, and for Pellet Exporting Projects

Dr. William Strauss
FutureMetrics

Eric Kingsley
Natural Resource Solutions LLC

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The mainstay of renewable energy in both Europe and the US is based on biomass. More than 65% of the total renewable energy that Europe generates is from biomass and the majority of that is from the combustion of wood. In the US about 50% of the total renewable energy generated is from biomass. Hydroelectric power makes up 19% in Europe and 35% in the US. Wind is 8% in Europe and 9% in the US, and solar is 1.6% in Europe and 1% in the US.

The use of this renewable, sustainable, and carbon neutral resource is growing in the northeastern US as modern wood pellet boilers replace heating oil boilers. But the real growth in the market is for export to Europe. The US is becoming a major exporter of refined utility grade wood pellet fuel for co-firing with coal in European utility generators so they can lower carbon emissions.

As a result, there is a need for price stability for the fuel and therefore price stability of the input raw materials. The traditional market for biomass grade wood as an input in the pulp and paper business is prone to large price fluctuations. We have identified a number of supply side and demand side effects as well as some macroeconomic effects that predict biomass wood prices. Our econometric model yields an R-square of 0.926. Based on our research, we have developed a new derivative financial product that allows a wood supplier to hedge these price effects and essentially supply wood into the energy markets at more or less constant real prices; even with long-term contracts.  

Our presentation will describe the markets and will show how we have used the DecisionTools Suite to assist in the development of the hedging product and how we have used @RISK to quantify the risk to the hedged supplier from their long-term supply agreements.

 

Essential Leadership Education:
Handling Project Uncertainty and Risk

Keith D. Hornbacher
University of Pennsylvania
, Hornbacher Associates

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What distinguishes effective leaders of successful organizations? Responses surely include how they handle project uncertainty and risk.”  The use of @RISK for Excel and Project by Mr. Hornbacher in the University of Pennsylvania’s graduate project leadership concentration (Dynamics of Projects, Programs, and Portfolios) will be discussed. Participants will learn what factors differentiate high performance teams from the rest when dealing with project risks, uncertainties and their natural extension into an organization’s strategic context.

This event’s focus is to define crucial elements in organizational environments that enable and inhibit effective leadership of programs and complex projects. The discussion is framed by different perspectives gained during independent reviews of NASA programs and GAO project audits. Mr. Hornbacher draws on his direct program/project risk management experience, observations as a working member of review boards in the field, and as an educator.

Three key points attendees will learn:

  • Characteristics of organizations whose teams manage project risk effectively and those that do not
  • Roles played by @RISK for Excel and Project in Penn’s project uncertainty/risk leadership education
  • Steps necessary for organizational leaders to be effective in handling project variables

 

GMS Stator Replacement Project at BC Hydro

Dean Cardno
DK Cardno Services

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In consideration of whether to replace or refurbish four generator stators, British Columbia Hydro in Canada used @RISK to evaluate the expected cost of the intervention and the future service lives of the equipment under each treatment alternative to determine the preferred treatment alternative. BC Hydro then used @RISK to evaluate the consequences of equipment failure and quantify the effect of immediate versus deferred intervention and determine the appropriate schedule to address known stator deficiencies.

 

Incorporation of Uncertainty into
Cost Estimating and Program Management

Gregory Brink
Value Management Strategies, Inc

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The management of project and program costs involves the careful control of cost estimates and alignment of expenditures in the most equitable fashion possible. As daunting as it may seem, this can be achieved through a multi-tiered approach involving the incorporation of uncertainty into project cost estimates, and ultimately the program cost estimate. The first step is to develop risk-based project estimates. The second step is to establish a program level estimate for program management. The final step is to iteratively update and manage the cost estimates throughout the individual project, and ultimately program, lifecycle for enhanced information in making programmatic decisions and controlling costs.

The integration of project uncertainties (or risk) into the cost estimates allow decision makers to understand the range of probable costs. Rather than viewing project cost estimates as deterministic and singular points, one can achieve a greater understanding of the likely outcomes by observing the range of possibilities. A range-based approach is achieved by observing and modeling risk in two dimensions, or by those areas in which the most risk that is directly manageable resides. The two dimensions of project risk for management are the estimate (or its associated uncertainties in prices and quantities) and the events that may transpire (or those situations that may arise that will incur an impact to the project, positive or negative). Estimate risk can be managed by iteratively engaging in a series of cost estimate management practices that simulate the probable prices and quantities based on market conditions and the project profile and correspondingly update the estimate. Event risk can be managed by engaging in proactive risk management workshops focused on developing risk response strategies and action plans to buffer the effects of negative risk and enhance the realization of opportunities. Overall, the efforts are focused on management and control of risk to control project costs and schedules such that the range of outcomes can be reasonably anticipated and planned for in the context of project and programmatic planning, management, and execution and delivery. This will be the central focus of this presentation as the development of a risk-adjusted approach to cost estimating and management is explored.

 

Integrated Cost and Schedule
Risk Analysis for Engineering Projects
using a Custom @RISK Solution

Mark P. Brumer
SAIC

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The case study examines the construction of an integrated cost and schedule risk model. The model is characteristic of large engineering projects for the chemical manufacture of military unique materials. These projects typically have budgets on the order of $400 million to $2 billion. Traditional models limit themselves to a schedule analysis, rationalizing that labor costs may contribute sixty-percent or more to the total expenditure. Nevertheless, significant cost risks remain: fabrication of customized process equipment, specialized materials of construction, labor price inflation, et al. A comprehensive solution considers the convolution of the cost risk analysis and the schedule risks analysis. In order to accomplish this, the probabilistic risk model exploits the functionality of @RISK 5.7 to pass schedule calculations to MS Project for evaluation. Concurrently, the integrated model simulates the risk arising from capital costs, variable costs, and schedule uncertainty. Thus, the integrated risk model captures all material cost drivers and returns a contingency allowance appropriate to and sufficient for the project risk tolerance.

 

Integrating @RISK Into an
Automated Relational Database Environment

Troy Cook
USGS

@RISK is a commercially available Monte Carlo simulation program used by the U.S. Geological Survey (USGS) to run probabilistic assessment models. It is used primarily as a standalone product to generate the results of undiscovered oil and gas resources estimates from probabilistic geologic input parameters. With the addition of Visual Basic (VB) programming @RISK can also be configured as an automated analytical tool to examine data stored in relational databases such as Microsoft Access and Oracle.

USGS assessments of continuous oil and gas accumulations rely heavily on distributions of individual well production performance parameters. These performance distributions are assembled from as few as ten wells or as many as ten thousand and in the past have been assembled individually and then the results grouped to form an empirical distribution.

A system was developed to incorporate @RISK into a probabilistic model executed from Access to compress the amount of time necessary for this analysis. VB code in Access was used to create structured query language queries to bring blocks of data from Oracle tables into Microsoft Excel. @RISK’s Excel Object Library was then used to fit this data and run simulations, and the final results were stored in Access tables. These results could then be used in a further analysis of sequential trends or patterns in the data.

The design of this type of system allows large quantities of data to be examined, quantified probabilistically, accurately described by a single cell answer, and stored for comparative purposes without an excessive labor component. Once the overall group behavior has been established, individual data strings within the group being studied can be examined in relation to their probabilistic position within the group and extrapolated within that context.
Any use of trade, product, or firm names is for descriptive purposes only and does not imply endorsement by the U.S. Government.  

 

The Law of Large Numbers vs. Cost Risk Models

Chris Caddell
Turner & Townsend

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The Law of Large Numbers indicates that with an increasing number of variables in a system, the overall result will tend towards the expected value. In other words, the distribution of outcomes from a model will narrow as the number of variables in the model increases. Risk analysts develop probabilistic project cost models with a wide range of variables, depending on a number of factors. Risk analysts need to be cognizant of the Law of Large Numbers, how it works, and how the results of the cost risk model will be impacted by the number of variables included. They also need to know how to deal with that issue while still providing a comprehensive, high quality, cost risk analysis.

 

Minimizing resource allocation in a low-fail scenario using @RISK: Balancing need for high coverage and high capital costs in a drug/device clinical trial

Chris Taber
Ikaria

Case study presenting a model developed for a biopharma drug/device clinical trial where patients must always have a functioning device (high cost vs. high coverage) regardless of the hardware failure rate (low-fail scenario) and the drug must be administered by the device. The model was used to ratify projections of how many devices and how much drug would be needed at peak trial enrollment and for each month thereafter, based on assumed clinical trial site and patient enrollment rates, device failure rates, proposed preventive maintenance timelines, and logistical distribution schedules.

Ikaria, Inc. is a critical care company focused on developing and commercializing innovative therapies designed to address the significant needs of critically ill patients in the hospital and ICU settings. The company’s lead product is INOMAX® (nitric oxide) for inhalation, the only FDA-approved drug for the treatment of hypoxic respiratory failure associated with pulmonary hypertension in term and near-term infants. Ikaria is headquartered in Hampton, NJ, with research facilities in Seattle, WA and Madison, WI, and manufacturing facilities in Port Allen, LA and Madison, WI.

 

Modeling uncertainty with Risk Adjusted
Return on Capital (RAROC) metrics

Allan Smith
Scottsdale Insurance Group

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This presentation will focus on utilizing @RISK to model uncertainty in Risk Adjusted Returns on Capital. As an E&S (Excess & Surplus) insurance company, Scottsdale Insurance Group is constantly offered opportunities to write new products. As a company facing capital allocation decisions (how do we allocate capital to where it will offer the best risk adjusted returns), the problem of dealing with uncertainty is enormous.

There is uncertainty around the premium size, expected loss and payout pattern, investment yield, as well as how much capital is needed to support a product at its desired financial rating. We use @RISK to model multiple variables to calculate a policy year basis return metric which allows us to ignore accumulated reserves based on prior years events, as well as ignoring current year adjustments made to previous policy years.

 

The New Plastic: Analytics

Andrew Pulvermacher
BestBuy

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Just like polymers could be shaped into anything new, data can be shaped into providing better business decisions and creating new experiences. Produced for executive decision makers and those interested in reinventing their business model, this presentation will highlight the importance data plays in your business.

Using examples from Best Buy’s Financial Services, Andrew will demonstrate how Analytics transformed a 15-year old credit card department into the fastest growing business unit by leveraging transactional, customer, and operational performance data.

Andrew will outline the ‘typical’ business analysis and highlight advanced methodologies using Palisade Software that help transform the standard ‘reporting and KPI’ company to the ‘risk managed’ organization.

During the presentation you will gain insight into:

  • How Analytics can transform the way you view your performance
  • The inherent uncertainty of your business and capitalize on your market randomness before your competitors do
  • How to view risk and optimize business performance

 

Optimizing Power Generation in a Confusing World using Evolver and RISKOptimizer

Mark Rudd
Rudd Asset Management

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The world of electric power generation is being challenged like never before. The dizzying array of new power sources in itself is complex. Add to this an industry that is rapidly being forced to meet ever more demanding emissions reductions and electric utilities throughout the world are facing a proverbial “perfect storm”. How do you meet emissions compliance and optimize it for your system?

New energy sources bring new opportunities. The use of new fuels, such as co-firing renewable fuels, could bring new life to emissions challenged boilers. But, how much co-firing is best? What fuels? What provides the best emissions mix? What is the most economical mix?

This presentation will discuss how Palisade’s Evolver and/or RISKOptimizer can be used to compare options and to optimize them. Not all options are going to “fit” every company’s portfolio. No single strategy works for every region of the country. Reliance on any one option is often not the best choice from a risk management perspective. A balanced approach can reduce technology risk. But, what is the right balance?

How do you choose your options? How do you compare the choices? How do you optimize the proper mix into your generation portfolio? What do you optimize it on? Capital cost? O&M costs? Rate of return?

This case discusses a case study of how this was done and how Evolver and RISKOptimizer can bring more clarity to a confounding world.

 

Picking Winners is for Losers:
A Strategy for Optimizing Investment Outcomes

Clayton J. Graham
DePaul University

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In the realm of investment decisions in general and sports betting in particular the objective sought is usually to maximize the return on investment - no surprise. However, in the gaming industry much credence is frequently paid to those with a “High Winning Percentage”. Such naïveté fundamentally ignores the importance of the "Line" (price) and magnitude of the specific investment.

To be an effective investor (in any arena), one must integrate the principal elements of the investment decision; specifically including:

  • Probabilities of success,
  • Price of investment (Line),
  • Magnitude of investment (Stake or Bet),
  • Schedule of returns.

According to principals at BetFair (large sports gaming internet site - based in the UK), only about 10% of those participating in sports gaming make a profit. Not only must one have a strategy, there must be an overt goal, e.g., declare “winning” after doubling the bankroll. This is in stark contrast to the typical gambler who says he’ll quit after losing $1,000.

Okay, most betters just don't comprehend the importance of management by objectives or stochastic mathematical modeling. Our goal is to develop a game plan to address those shortcomings. Specifically, the presentation will cover:

  • Identifying appropriate target games by defining market inequities,
  • Outlining fundamentals of sports gaming,
  • Determining probability of winning predicated on the game,
  • Deriving expected return on investment for the game and type of bet,
  • Sizing of  the optimal investment (bet or stake);including addressing the defective Kelly criteria and deriving an alternative innovative optimization methodology,
  • Providing examples with actual results,
  • Outlining decisions characteristics of  “Amateurs”,
  • Debunking some popular myths,
  • Building a game plan for optimal outcomes.

It is an imperative to remember:
“Picking a winner is not at all the same thing as making a smart bet!”

 

Quantifying Uncertainties in
Environmental Regulations

Poh-Boon Ung
ARCADIS

Economic analyses are frequently used to support various policy decisions and environmental regulations. Both the United States Environmental Protection Agency (USEPA) and Office of Management and Budget (OMB) encourage the use of sound science to support any decision-making process. For example, cost-benefit analysis is often used to evaluate both the favorable effects of policy actions and also the opportunity costs of those actions. However, in any evaluation, there are inherent uncertainties in the inputs, model assumptions, and corresponding results. This presentation will discuss several environmental regulations and how ARCADIS uses @RISK in conjunction with economic tools and methodology (e.g., cost-benefit analysis, externality assessment) to quantify the uncertainties and obtain more meaningful results.

 

Risk Analysis and Real Options in Upstream Projects using @RISK: The Gulf of Mexico Case

Rafael Hartke
Petrobras

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A model developed at Petrobras for the risk analysis and real options valuation of downstream oil and gas projects will be presented. In addition, a case study on exploration and production in the Gulf of Mexico will be discussed.

Petrobras, the national oil company of Brazil, is among the world’s largest energy companies.

 

Risk Management (using @RISK) within Portfolio Management and Financial Planning

Matt Rosenberg
RoseCap Investment Advisors

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This presentation is intended to show the benefits of using Monte Carlo simulation (@RISK) to assess and manage risk in the processes of financial planning, portfolio construction, and portfolio management for individuals, families and institutional investors. Topics will include a general overview of the financial planning and portfolio management processes, as well as specific examples showing the use of @RISK for risk management within these processes.

 

Risk Modelling of a Mega Project
Sanction Estimate

Paul F. Gill
Husky Energy

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Mega Projects by their very nature consist of smaller individual projects that integrate together to form a whole. In a similar fashion the estimate for such a project also comes from a multitude of diverse disciplines with differing sources and work practices. This paper will use a case study to show how a risk model for the Sanction Estimate was built in Palisade's @RISK using inputs from quantitative schedule risk models, systemic risk models, risk ranging workshops, and the various risk registers to identify appropriate levels of contingency and Management Reserve.

 

The Role of Probabilistic Analysis in Preparation of Negotiations for a Lump Sum Contract

Jay O’Connor
Turner & Townsend

Turner & Townsend will present a case study of how probabilistic analysis can be used in conjunction with a detailed estimate audit of a contractor’s priced proposal and schedule to improve the owner’s position in contract negotiation.

 

Specialty Pharmacy Spending - Using @RISK to Sell Value to Clients in the High Cost Arena

Seth Traubenberg
Walgreens

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Specialty medications, those high-cost pharmaceutical and biologic agents that require significant controls to manage and dispense correctly, currently make up 25% of the spend going through Pharmacy Benefit Managers. Estimates state that this will increase to 40% over the next three-to-five years. Lack of adherence to medication therapy represents several hundred billion dollars in waste each year in the United States. In addition, as disease states progress, individuals and employers incur the added costs of additional treatments, doctor visits and even hospitalizations.

To help manage the fastest growing area of pharmacy spend, Walgreens has implemented a number of management programs aimed at specific disease states. These management programs are tailored to specific diseases and can help to reduce pharmacy spending as well as reduce the frequency or even need for advanced treatments and hospital visits. A combination of client-specific data and the capabilities of @RISK is allowing Walgreens to drive market share while reducing customer spend and improving patient outcomes.

 

Using Analytical Tools for
Agricultural Development

John McKenzie
Innovastat

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One significant technology that has not been adequately implemented in development work is the use of decision making tools incorporating risk and uncertainty by farmers. Farmers with limited resources need to maximize their chances of success, not just for their own survival but for the common good. The results of poor choices or an inability to plan for unusual events in the farm sector can have far-reaching impacts on local economies. Yet at the present moment there are few approaches incorporating risk for decision making by small farmers. I developed tools and techniques that create farm plans that include decisions that minimize risk, taking into account weather conditions, commodity price fluctuations, input price changes, and even cultural characteristics.

Surprisingly, methods such as Monte Carlo simulation and optimization under uncertainty – employed routinely throughout the corporate world – are not being applied to solve small farmer problems. My work has been to utilize analytics and advanced decision strategies with farmers. I believe that using this technology will give the subsistence farmer the greatest chance of success (e.g. maximizing the certainty of achieving a particular goal), and will provide incomes that are greater and more stable from season to season. Without the benefit of these tools to assess and manage risk, small farmers face conditions that add significantly to their risk and reduce their likelihood of success, sustainability or profitability.

My initial steps have been to educate consultants, funding agencies, and government officials in the field of risk and decision analysis through formal training in higher education classrooms and computer labs, as well as informally at conferences and meetings I have been asked to attend. Funding agencies need to be shown the usefulness of risk analysis for the small farmer so that changes in the established ways of decision-making can be elevated to a higher plateau.

My method is not imposing a top-down solution but investigating and analyzing what currently exists at the farm or community level in the context of risk. Implementation of decision analysis tools first involves learning and collecting information from small farmers in the field and developing farm plans.

Using the Monte Carlo simulation and other appropriate optimization software, I then work directly with the farmers to implement the strategies that most effectively minimize their risk. At every stage the farmer is consulted and involved in the process of making his/her farm successful.

Beyond assisting individual small farmers, this method could greatly enhance decision-making at the public policy level. The results of the farmer input and the individual farm plans will reveal the components of various systems and will demonstrate that there may be unintended consequences of public policy that thwart a successful outcome. When such constraints are identified, then relevant policy solutions that are effective, both in cost and impact, need to be explored and implemented. These policies can be in terms of research, education, improved targeting and delivery of farm subsidies, changes in laws, improvements in infrastructure or credit, etc. These recommendations are preferable to opting for a costly and inefficient back of the envelope approach when these problems seemingly become too complex to solve.

 

Using PrecisionTree for Modeling a
Project Investment Decision

David Perkins
Grand Canyon University

This presentation will highlight PrecisionTree’s features by modeling an investment decision for a hypothetical information technology project. Emphasis will be placed on PrecisionTree functionality and interpretation of reports. Specifically, the presentation will show how to construct a decision tree and interpret associated expected monetary values. The presentation will also demonstrate PrecisionTree’s risk profile, policy suggestion, and sensitivity analysis functionality. Use of the utility function will also be demonstrated. The presentation will conclude with a demonstration of how @RISK can be integrated into PrecisionTree to reveal how uncertainty can be incorporated into a decision model.

 

Using @RISK to Forecast Retail Sales Operations for Feasibility of a Strategic Expansion: A Case Study

Steven Slezak
California Polytechnic State University

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A simple and straightforward simulation of income statement forecasts for a high volume retail business, this case study illustrates how @RISK monte carlo simulation can be used to transform a static financial model into a dynamic strategic planning tool.

A retail bookstore operation settled on a strategy of doubling its space by acquiring an adjacent retail suite. A feasibility study was required by the board to determine whether to go ahead with the investment. The feasibility study analyzed historic cash flows to determine basic parameters of revenues and costs. These parameters were used to create pro-forma income statements going forward several years. Palisade's @RISK program modelled these cash flows and identified possible ranges for forecasted cash flows, allowing the board and company executives an opportunity to consider their decision over a wide array of possible outcomes.

A basic case illustrating the use of @RISK in the preparation of pro-forma income statement forecasts and capital project valuation methods using NPV and cost of capital, this presentation is aimed at new and intermediate users of @RISK and those interested in using @RISK to better inform strategic decision making.

 

Using Simulation Modeling to Evaluate a Medical Insurer's Reinsurance Coverage: A Case Study

Lina S. Chan
CP Risk Solutions, LLC

Dr. Domingo Castelo Joaquin
Illinois State University

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This paper demonstrates how to use simulation modeling to support the reinsurance decision of a medical insurer. We do this in the context of a simplified but realistic example where a medical insurer is evaluating a request for proposal to provide stop-loss coverage for a Trust which provides comprehensive medical coverage to employees of a major conglomerate. We model claims frequency and individual loss severity under the assumption that the distribution of trended claims in the most recent five-year period is a good approximation to the distribution of claims in the rating period. We then demonstrate how simulation can be used to evaluate alternative reinsurance options for the stop-loss provider. We incorporate uncertainty about the true loss distribution through the use of alternative distributions to model total claims.

 

Best @RISK Features You Might Not Be Using

Dr. Chris Albright
Indiana University

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In this session, Chris will explain many of the less commonly used features of @RISK that are very useful for modeling. These “hidden gems” are tools that can take your analysis to the next level, add new insights, or enhance the accuracy of your current process. Topics covered include the use of correlations and dependencies in models to represent relationships between uncertain inputs; @RISK Goal Seek, which uses simulation to arrive at a desired target value; Stress Analysis, which lets you focus on only the more extreme scenarios that you define; flexible uses of SimTable, which lets you run back-to-back simulations, changing one or more controllable variables you specify; and distribution property functions such as RiskSixSigma that you can “tack onto” other @RISK functions. Other tips may be covered as time permits.

 

Customised Software Applications
using @RISK & VBA

Dr Javier Ordóñez
Palisade Corporation

@RISK and DecisionTools Suite software ship with full-featured development environments that allow you to create custom applications using Palisade technology directly in Excel (Excel Developer Kits or XDKs). You can customize the application interface to include only what the users need, hiding unused @RISK functionality and preventing user access to the underlying model logic. You can also automate processes like reporting, generating only the charts and data you want. The result is a perfectly tailored application ready to roll out to your workgroup. And because the application is in Excel, the training required for users is minimal.

Palisade Custom Development has written applications for cost estimation, asset management, retirement planning, oil and gas prospecting, and more – all utilizing @RISK technology in Excel. In this presentation, we will cover as many examples of custom applications as time allows.

 

Decision Modeling with PrecisionTree

Dr. Chris Albright
Indiana University

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PrecisionTree is a powerful visual and analytical tool for mapping out complex, sequential decisions using decision trees directly in Excel. Using nodes, branches, and probabilities, you can represent and organize decisions ranging from oil prospecting to site development to options analysis. PrecisionTree can also be combined with @RISK to incorporate uncertainty and risk in tree models. This presentation combines an introduction to the PrecisionTree interface with demonstrations of how PrecisionTree can be used to analyze various problems in decision analysis.

 

Distribution Fitting in @RISK 6.0

Erik Westwig
Palisade Corporation

Distribution fitting is an important modeling tool that allows you to use historical or industry data to define a probability distribution function in @RISK. In this way, you can use your data to most accurately describe the uncertainty you face. Fitted distribution types are ranked against your data set so that you can determine which of the distributions suit your situation the best.

@RISK 6.0 offers a wide range of enhancements in distribution fitting. Methods used to determine fits, statistical tests used to assess the quality of fits, and the user interface have all been improved. Erik will go over the latest changes to distribution fitting, and explain how you can get the most out of this powerful feature in your own risk modeling.

 

Energy Modeling Applications
of the DecisionTools Suite

Roy Nersesian
Monmouth University/Columbia University

Palisade has recently published three manuals by Roy Nersesian on incorporating @RISK, Evolver, and RISKOptimizer in a number of different financial and operational applications. In this presentation, Roy will discuss the development and interpretation of quantitative models for energy project evaluation and assessment. A variety of resource allocation, project risk analysis, financial risk mitigation models will be covered. Roy will bring his experience teaching the Energy Modeling course at the School of International and Public Affairs at Columbia University.

 

Finding Optimal Solutions with
New Evolver and RISKOptimizer 6.0

Dr. Mirek Janusz
Palisade Corporation

RISKOptimizer 6.0 and Evolver 6.0 use powerful algorithms to perform optimization in Microsoft Excel. RISKOptimizer builds on traditional optimization by adding Monte Carlo simulation to account for uncertain (stochastic), uncontrollable factors in your optimization problem. Both have long used genetic algorithms to arrive at solutions that are impossible to find using most traditional methods. New version 6.0 introduces new optimization methods that can find optimal solutions even faster than genetic algorithms.
This session introduces you to these powerful tools, showing you how to set up a model, define constraints within the model, and ultimately arrive at the optimal outcome. These steps will be illustrated by means of a detailed retirement portfolio optimization example.

 

Introduction to The DecisionTools Suite

Thompson Terry
Palisade Corporation

Erik Westwig
Palisade Corporation

This session will show you how to use the elements of the DecisionTools Suite as a comprehensive risk analysis, decision-making, and statistical analysis toolkit. Each of the products in the Suite — @RISK, RISKOptimizer, Evolver, PrecisionTree, TopRank, StatTools, and NeuralTools — will be presented as time allows, showing how they can be used to solve practical problems in the real world. Pick up hints and tips for using the products together. We’ll also point out interface improvements along the way that can save time and enhance ease-of-use. Please note this session is not an overview of the new features in version 6.0. That is covered in New Features of DecisionTools Suite 6.0 and @RISK 6.0.

 

Introduction to @RISK

Thompson Terry
Palisade Corporation

This introduction to @RISK will walk you through a risk analysis using various example models. Key features of @RISK will be highlighted, and new interface enhancements in version 6.0 will be pointed out along the way. You will experience the intuitive interface of @RISK as you define distributions, correlations, and other model components. During simulation you will be able to see all charts, thumbnails, and reports update in real time. View results with a variety of graphing and reporting options. There’s so much to see, we’ll cover as much as time permits. Please note this session is not an overview of the new features in version 6.0. That is covered in New Features of DecisionTools Suite 6.0 and @RISK 6.0.

 

Introduction to Project Risk Management
using @RISK 6.0

Dr Javier Ordóñez
Palisade Corporation

The aim of this seminar is to provide a basic understanding of how the new @RISK 6.0 can help you manage uncertainty in your Microsoft Project schedules. Using Monte Carlo simulation, you will learn how to account for schedule and costs risks in a quick and comprehensive way. At last, here is a way to answer the question “What is the probability that my project will come in on time and within budget?” And with new version 6.0, risk modeling of your Project schedules is much more flexible and powerful than ever before.

We will show you how to set up and run simulations, and how to interpret the results. You will learn how to use @RISK step-by-step, and become familiar with basic concepts and terminology. We’ll demonstration powerful graphing and reporting that pinpoints where your risks lie and what their impact may be.

You will see how using @RISK for your projects enables you to:

  • Calculate the probability of success
  • Graph the margin of error around the most likely outcome
  • Quantify and prioritize the risk drivers
  • Quantify the amount ‘@RISK’

 

New Features of DecisionTools Suite 6.0
and @RISK 6.0

Sam McLafferty
Palisade Corporation

Dr. Mirek Janusz
Palisade Corporation

Erik Westwig
Palisade Corporation

The upcoming 6.0 release of the DecisionTools Suite and @RISK marks an exciting advancement in quantitative risk and decision modeling. Powerful new analytical tools and robust ease of use features will appeal to both new users and seasoned experts alike. In addition, version 6.0 makes risk modeling across different platforms much simpler than ever before. There is something for everyone in DecisionTools and @RISK 6.0, and Palisade president Sam McLafferty will lead a discussion of the most important new features. Other Palisade software engineers will also be on hand to answer questions and provide expert insights into how version 6.0 can work for you.

 

Predictive and Data Analysis with
NeuralTools and StatTools

Dr. Chris Albright
Indiana University

» Download the presentation

In this session we will learn how to use Palisade’s two data analysis tools: StatTools and NeuralTools.

StatTools is a Microsoft Excel statistics add-in. This session will cover how to perform the most common statistical tests, and will include topics such as: Statistical Inference, Forecasting, Data Management, Summary Analyses, and Regression Analysis.

NeuralTools imitates brain functions in order to “learn” the structure of your data. Once NeuralTools understands the data, it can take new inputs and make intelligent predictions. The new predictions are based on the patterns in known data, and offer uncanny accuracy. NeuralTools can automatically update predictions when input data changes, and it can even be combined with Palisade’s Evolver or Excel’s Solver to optimize tough decisions and achieve desired goals. We will demonstrate, using easy-to-understand examples, applications of NeuralTools predictions.

 

Selecting the Right Distribution in @RISK

Thompson Terry
Palisade Corporation

This session covers the choice of the appropriate distribution in @RISK. A variety of approaches are presented and compared, including pragmatic, theoretical and data-driven methods. We will discuss the use of different distributions to address a wide range of risk modeling situations.

 

EXPERT SESSIONS
by appointment with Palisade experts and consultants

New this year, we are offering one-on-one consulting sessions with Palisade technical experts and consultants throughout the Palisade Risk Conference. Sign up for a 45-minute slot to meet with us and discuss your own risk or decision modeling challenges. Feel free to bring your laptop and your models. All sessions are confidential and there is no additional charge. All consultations will be held in separate room, though several one-on-one meetings may be going on at once.

Slots are available on a first come, first serve basis. To sign up, please contact your Palisade sales representative or email us at sales@palisade.com.

 


Presenters

Christina I. Ray, Plenary Speaker
Senior Managing Director for Market Intelligence, Omnis

Christina I. Ray is Senior Managing Director for Market Intelligence at Omnis and co-head of the firm's practice in Threat Finance & Market Intelligence. She is an experienced trader, asset manager and risk manager with extensive experience in multiple asset classes, including fixed income, equities, commodities and their derivatives. At Omnis she devotes her applied mathematics and program development skills to the creation of algorithms which provide early warning of tactical and strategic threats. She is also expert in a variety of capital markets risk management techniques and their application to problems in the national security and intelligence domains.

Ms. Ray has advised regulatory bodies including the CFTC and SEC and from 2001 through 2006 served as Project Manager of a strategic assessment regarding U.S. national security and the integrity of the financial infrastructure which culminated in a proof of concept based on its findings and recommendations. She recently completed several special studies for the U.S. government regarding the use of market intelligence for assessment of geopolitical risk.

Prior to Omnis, Ms. Ray held a number of senior positions at Drexel Burnham, Daiwa Securities and a hedge fund, where she was involved at various times as an options trader, risk manager and trading manager.

Ms. Ray has a B.A. and M.S. in Physics from Michigan State University and took additional Ph.D. courses at the University of Michigan. Ms. Ray is the author of The Bond Market - Trading and Risk Management (Richard D. Irwin, November 1992), used as a textbook in the finance departments of graduate schools and in the training programs of certain primary dealers. Ms. Ray recently released her third book, Extreme Risk Management: Revolutionary Approaches to Evaluating and Measuring Risk.

Dr. Chris Albright
Professor Emeritus of Operations & Decision Technologies, Kelley School of Business, Indiana University

Dr. Albright first joined Indiana University in 1972, and came to be known as the Quant Father at the Kelley School of Business. For nearly 40 years, he taught MBA students how to make better decisions. His professional interests and expertise are in spreadsheet modeling for optimization, statistical analysis and simulation, developing Excel add-ins for statistics, statistics for research, stochastic models in management science, quantitative methods for MBA core, web page development and database access with .NET, data mining, and VBA for Excel. Drawing from finance, marketing, and operations, Dr. Albright’s teaching style has always been to analyze real business problems using practical quantitative techniques. He is the author and co-author of many leading MBA textbooks, including VBA for Modelers, Data Analysis and Decision Making (with Wayne Winston and Christopher Zappe), and Practical Management Science (with Wayne Winston). Dr. Albright also developed the statistical add-in StatPro for Excel, later developed as StatTools by Palisade Corporation. Currently, Dr. Albright provides training, development, and consulting services for Palisade Corporation.

Gregory Brink
Director of Risk Management and Principal Economist, Value Management Strategies, Inc.

Gregory Brink is the Director of Risk Management and Principal Economist for Value Management Strategies, Inc. (VMS), a Value Engineering and management consulting firm based in Escondido, CA. Mr. Brink is a Certified Value Specialist, Risk Management Professional, Project Management Professional, and Certified Cost Estimator/Analyst with extensive experience performing risk analysis, risk management, financial and life-cycle costing analysis, forecasting, value analysis, and economic impact analysis on projects of all scale and scope.   Mr. Brink’s specializations through the use of Value Methodology include quantitative/qualitative risk and uncertainty modeling and analysis, risk management, project management, financial analysis, economic analysis, market analysis, and economic forecasting for both private sector and government organizations. Mr. Brink’s experience includes working on infrastructure and vertical construction projects of varying scale and scope, ranging from a million dollars to multibillion dollar engagements in excess of $50 billion.

Mark P. Brumer
Senior Chemical Engineer, SAIC

Mark Brumer is a Senior Chemical Engineer with Science Applications International Corporation (SAIC), where he serves as the Risk Manager for the United States Army Element, (USAE) Assembled Chemical Weapons Alternatives (ACWA) Program. Mr. Brumer has 20 years of experience in the chemical process industry, with a background in manufacturing operations, process optimization, and project management, in the defense, energy, and commercial sectors. Mark holds a Bachelor of Science in Chemical Engineering from the University of Massachusetts and a Master of Business Administration from the University of New Hampshire.

Chris Caddell
Vice President of Management Consulting, Turner & Townsend

Chris Caddell is the Vice President of Management Consulting at Turner & Townsend in Houston, Texas.  He consults for owners on projects of all types.  Chris has 23 years of construction and project management experience, covering projects around the world in multiple industries.  Chris is a Professional Engineer in the State of Texas, a PMI certified Project Management Professional, and an AACEI Certified Cost Engineer.  He has worked with projects in all stages of development. He has been conducting cost and schedule risk assessments for projects for more than ten years, ranging from less than one million to multi-billion dollar projects.  He has conducted risk assessments on over a 100 different projects at various stages.

Dean Cardno
Principal, DK Cardno Services

Mr. Cardno is a Chartered Accountant and the principal of DK Cardno Business Advisory Services, which provides project development and evaluation services to clients undertaking large capital projects, primarily in the energy industry. Mr Cardno’s clients include large energy consumers, natural gas transmission and distribution utilities, IPP developers, and electric utilities across Canada. Mr Cardno has used Palisade software to reflect project cost risks, market risks, and risk of in-service equipment failures.

Lina Chan
Partner, CP Risk Solutions, LLC

Lina S. Chan, FSA, MAAA, FCA, is a partner and co-founder of CP Risk Solutions, LLC. Ms. Chan has over 20 years of underwriting, actuarial and risk management experience in the life and health insurance industry. At CP Risk Solutions, she consults with clients in the areas of product and portfolio strategies, market and product entry feasibility, acquisitions, company and product risk management, pricing, underwriting, program management, valuation, reinsurance solutions and broker relations.

Immediately before founding CP Risk Solutions, LLC, Ms. Chan was a senior vice president at Platinum Underwriters Reinsurance, Inc. in charge of the accident and health reinsurance underwriting operations. Her other experience includes Milliman USA, Transamerica Reinsurance, Management Facility Corporation, Actuarial Sciences Associates and Prudential Insurance Company of America where she played a leadership role in various actuarial and risk management capacities.
Ms. Chan is actively involved in the health care industry. She has served on committees for the American Academy of Actuaries, the Society of Actuaries, the Actuarial Society of New York and the Self-Insurance Institute of America. She has also presented at numerous industry events.

Ms. Chan is a Fellow of the Society of Actuaries (1994), a Member of the American Academy of Actuaries (1991) and a Fellow of the Conference of Consulting Actuaries (2006). She graduated Bachelor Magna Cum Laude from the City University of New York (1987).

Troy Cook
Engineer, USGS

Troy Cook is a petroleum engineer who has been working with the U.S. Geological Survey Central Region Energy Resources Science Center since 1998. As a member of the National Oil and Gas Assessment review team his primary responsibilities include well performance issues related to unconventional or continuous resource assessments and the methodologies used to make those estimates.   

Francisco Cruz
Senior Engineer, PMA Consultants

Mr. Francisco Cruz, PMP, PMI-RMP of PMA Consultants LLC is a senior engineer with over 7 years experience in cost control, cost estimating, scheduling management, risk management, project management, project inspection, and supervisory management.  His project experience includes infrastructure, pharmaceutical, mixed-use, corporate office buildings, and municipal projects.

Mr. Cruz has performed cost and schedule risk analyses on more than 30 infrastructure and pharmaceutical projects, including tunnels, airports, bridges, and ports totaling more than $1.9B. In addition, he has been part of the internal team that launched and implemented the Risk Management Practice within the Port Authority of NY & NJ, and he has actively participated in the review of the Project Risk Management section of the PANYNJ’s Project Management Manual of Standards and Procedures.

Currently, Mr. Cruz serves as one of the leaders of the risk knowledge center within PMI Scheduling Community of Practice (PMI SCoP). He holds a B.S. in Civil Engineering, and a M.E. in Construction Management. He is also an Engineer in Training (EIT), a certified project management professional, a certified risk management professional, and a certified LEED Green Associate.

Paul F. Gill
MBE M.Sc. MIMarEST CEng, Coordinator of Project Risk, Husky Energy

A Chartered Engineer with over twenty-five years experience in Project, Total Quality, Risk and Change Management. Paul spent 21 years in the Royal Navy as a marine engineer serving in nuclear submarines and staff appointments, before becoming a Risk Management consultant in July 1998 and then joining Husky Energy in 2007 as their Co-ordinator of Project Risk.

Within Husky Energy Paul is responsible for facilitating the development, implementation and maintenance of Risk Management Plans / Reports and Analysis for all projects across the Husky Portfolio. This responsibility included ensuring that the projects are in alignment with the requirements of the Project Delivery Model. Specific responsibilities include ensuring that Project Risk Registers are in place, supporting the Project Team in identification of mitigation plans, and options for major risks associated with the development and constructing a probabilistic risk analysis model for the development options, challenging key assumptions and uncertainties, and to keep updated the model to optimize the execution strategy.

Adept at both Qualitative and Quantitative risk management, he has worked on both long commitments as Risk Manager to a large project, and in short reactive troubleshooting assignments across a variety of disciplines including oil and gas, transportation, pharmaceutical and defence. Paul likes to be considered a utility consultant, able to apply his analytical and problem solving skills to a wide range of project management challenges, particularly in the pursuit of risk reduction. He is proficient with a variety of tools to construct Monte Carlo simulation models for quantitative risk analysis. In addition, he has produced bespoke toolsets to provide management focus on issues such as contractual compliance, predictive analysis, and evidence for Boards of Inquiry.

Clayton Graham
Department of Management, DePaul University

Clay Graham is a management consultant specializing in analytical and graphic econometrics. His formal education includes a B.S. from Purdue and graduate degrees in Economics (M.A.) and Business (M.B.A. - Kellogg School of Management, Northwestern University). He was a NASA Scholar (National Aeronautical and Space Administration) during his Ph.D. studies at Northwestern (concentration in advanced large scale computer modeling and mathematical simulation.) Clay has functioned in various advisory capacities to Purdue and Northwestern Universities. His entrée into the education field first came while a volunteer for a citizens group in Barrington (evaluating academics, finances and taxes). During that project, creation of integrated databases and innovative statistical modeling drew the interest of many professionals and resulted in his presentations to: The White House, Illinois State Board of Education, Center for Governmental Studies (Northern Illinois University) and many boards of education.

Prior to his current undertakings, he was CEO of an upstart aerospace, laser mapping and engineering firm. He’s brought with him years of practical management and leadership experience from the metal finishing industry where he owned and operated his own firms in the Chicago area. He introduced effective statistical process control technology to many firms including: Motorola, Siemens and Ford. He served that industry by being president of the local trade association, a director of several national alliances and sitting on industry standardization and quality committees.

Prior to running his own companies, Graham was with one of the world's foremost Management Consulting firms - A.T.Kearney, lnc. where he introduced cutting edge computer and mathematical modeling to the transportation and service distribution industries. Clay has written and published extensively in the areas of: profitability and control, marketing, financial risk, computer integrated manufacturing and technology. He has been a featured and keynote speaker at many trade association and professional conclaves. He was awarded the top technical paper in the world at the SECOND ASIAN METAL FINISHING FORUM (part of the Tokyo World Exposition). At INTEREX EUROPE (Hewlett-Packard users) he presented an award winning work on a fully integrated system of research and development, process control and management integrating: personal computers, micro-systems, programmable controllers and digital-analog interfaces. He was also the subject of a press conference by Alteon Networks at Networld + Interop (Atlanta 1998) where he introduced the first commercial application of large file transfer incorporating “Jumbo Frame Technology”.

Clay and his companies have been the subject of articles in Forbes, Business Week, Modern Metals, Industrial Finishing and Arthur Andersen's Small Business Forum. In addition, the methods incorporated in the management of his firms have been utilized in academic case studies in the United States and Western Europe. He was selected to speak on “The Management of Professional Advisors” before a joint session of the American Bar Association and American Institute of Certified Public Accountants.

He has served as an Advisor to the White House, Members of Congress in the areas of economics, environmental control and management strategy. More recently, he now consults with professional baseball.

Rafael Fernando Hartke
Trading and Logistic Analyst, Petrobras

Mr. Hartke is a Trading and Logistic Analyst at Petrobras, under the Financial Planning & Risk Management department. He has a MSc degree in Mechanical Engineering and is also a certified Energy Risk Professional, certified by the Global Association of Risk Professionals.

Mr. Hartke main interests and activities include:

  • Development of mathematical models in engineering and finance;
  • Modeling of complex investment projects (risks, options, real options);
  • Development of methodologies and risk models for investment projects;
  • Monitoring, econometric modeling and forecasting of time series (commodity prices, commodity demands and financial series);
  • Research and training in risk analysis and Monte Carlo simulation

Randy Heffernan
Vice President, Palisade Corporation

Randy Heffernan started with Palisade in 1997, and helped the company expand with its first overseas office in Plymouth, England, in 1998. Further geographic expansions included London in 2002 and Sydney, Australia in 2005. He has held a variety of roles in sales, marketing, and management, and currently oversees much of the corporate operations. Randy works closely with the sales staff to understand client needs and liaise with software development. Randy holds a Bachelor of Science degree in Business Management and Marketing, and an MBA, both from Cornell University.

Lyle Hervert
Business Excellence Black Belt, Black & Veatch

Lyle Hervert is a Business Excellence Black Belt for Black & Veatch which is an employee owned company involved in the design and execution of hundreds of major capital construction projects. Lyle is an ASQ certified Six Sigma Black Belt, former Master Black Belt with TRW and is an SME certified Bronze Level Lean Sensei. He is a graduate of Upper Iowa University.  Mr. Hervert has more than 30 years of experience in the Consumer, Automotive and Engineering Services industries serving as Quality Engineer, Director, Senior Consultant and Black Belt.

Keith D. Hornbacher
Affiliated Faculty, Organizational Dynamics Graduate Programs, University of Pennsylvania
Principal Consultant, Hornbacher Associates

Keith D. Hornbacher, MBA, is a project risk management educator and an experienced practitioner. He is in his sixth year as a member of Affiliated Faculty in Organizational Dynamics Graduate Programs, University of Pennsylvania. Mr. Hornbacher, founder and principal consultant of Hornbacher Associates, leads seminars of mid-career and senior professionals and advises capstone candidates while they write theses for the Master’s degree. His research interests are in unique challenges faced by global virtual project teams, the dynamics of unknowns in complex project systems, and roles of independent review in effective project governance. Graduate courses he leads include Managing Project Risk, Uncertainty, and the Unexpected; Quantitative Project Cost/Schedule Risk Analysis; and Decision-Making Under Uncertainty.

During the period of 2009 – 2011, as an independent sub-contractor Mr. Hornbacher assessed program/project risk of NASA’s SOFIA science program (an exploration of the universe with infrared technology), ICESat-2 (an earth orbit satellite designed to measure polar ice thickness, sea ice flows, and rain forest canopies), lead program/project schedule and risk audits for the U.S. Government Accountability Office (GAO), conducted cost/schedule risk analyses of a Mexican energy project, and performed schedule risk assessments of a U.S. Navy aircraft carrier automated landing system development program.

For more than 25 years Mr. Hornbacher has been leading teams in Monte Carlo simulation of complex projects. In 1993, he founded Hornbacher Associates following a decade developing quantitative cost/schedule risk analysis methods and software as an executive in a Los Angeles based firm. Signature achievements include project risk assessments of stealth aircraft technology and integrated cost/schedule risks of the Canadian North Atlantic off-shore oil drilling platform, Hibernia.

Direct project experience and academic research range from mega-projects to incubator-sized startups. His work with industries across the globe demonstrates scalability and portability of protocols documented in the Practice Standard for Project Risk Management (2009) and the PMBOK® Guide, 4thed. (2008), both published by the Project Management Institute (PMI®).

Mr. Hornbacher’s commitment to professional organizations includes roles as a designated Subject Management Expert (SME) in the PMI® virtual Risk Management Community of Practice, and as a contributor to revisions of the PMBOK® Guide. He is a member of an MBA advisory council (University of St. Thomas), a senior member of the Institute of Industrial Engineers, and a past director of the International Council on Systems Engineering (INCOSE) Northstar Chapter. Mr. Hornbacher was awarded the academic degrees of Bachelor of Science (BSci) from Iowa State University-Ames, and Master of Business Administration (MBA) from Minnesota State University-Mankato.

Dr. Mirek Janusz
Software Engineer, Palisade Corporation

Mirek Janusz is a software engineer at Palisade Corporation. He holds a masters degree in computer science from Cornell University. He has helped develop Palisade applications for risk analysis, statistical analysis and optimization, and has assisted many companies from a range of industries in integrating Palisade's Developer Kits into their own applications. He is the lead developer for Palisade products Evolver, RISKOptimizer, NeuralTools, and StatTools.

Dr. Domingo Castelo Joaquin
Associate Professor, Illinois State University

Dr. Domingo Castelo Joaquin is Associate Professor of Finance at Illinois State University. He specializes in decision theory, financial modeling, and real options valuation. His works have appeared in the Journal of Post Keynesian Economics, Theory & Decision, Economic Letters, Quarterly Review of Economics and Finance, Risk Management and Insurance Review, and the Journal of International Money and Finance. His work has been cited in CNNfn, the New York Times, Money Magazine, Kiplinger’s, Time.com and other publications. He received his Ph.D. in Business Administration from Michigan State University (1997).

Eric Kingsley
Vice-president, Natural Resource Solutions LLC

Eric Kingsley serves as vice-president of Innovative Natural Resource Solutions LLC (INRS), a natural resource industries consulting firm with offices in New Hampshire and Maine. 

Since joining INRS in 2000, he has worked with dozens of parties on the development of new biomass energy facilities around the country, including a key role in the development of New England’s only new biomass power plant.  Eric has extensive experience with wood supply and economics for biomass use in electric, thermal and liquid fuel projects.

Eric has recently worked with developers of biomass energy projects in Virginia, New Hampshire, New York, Maine, Vermont, Maine, Massachusetts, North Carolina, Missouri, Georgia and California.  Eric has recently developed a unique tool for owners and investors of large-scale biomass facilities to manage fuel cost risk – potentially removing one of the largest barriers to large-scale industry growth.

Eric serves on the Board of directors for several non-profits, including:

  • Biomass Energy Resource Center (BERC), an organization that assists communities, colleges and universities, state and local governments, businesses, utilities, schools, and others in making the most of their local energy resources.  http://www.biomasscenter.org/
  • CEI Capital Management Ltd., one of the nation’s largest New Market Tax Credit organizations, bringing capital investment to low-income and disadvantaged communities.  www.ceimaine.org
  • Carbon Tree LLC, a partnership of the Empire State Forest Products Association and the American Forest Foundation that aggregates and trades sequestered carbon credits from managed forest lands.  www.carbontree.org

Eric has a Master’s Degree in Resource Economics from the University of New Hampshire, and served for five years as executive director of the New Hampshire Timberland Owners Association, a trade association representing all sectors of that state’s forest industry. 

Andre Lowe
New Venture Manager, Intel Corporation

Andre Lowe works at Intel Corporation as New Venture Manager in the Incubation and Innovation Group (IIG).  IIG looks for disruptive business concepts inside Intel, works to develop the business model and strategy, and evaluates the market potential.  We then value and optimize the portfolio of business options and selectively fund them in VC-like model.  The mid-term goal for each business is to staff the venture with entrepreneurial-minded experts, to fund them through a series of tech-readiness milestones, and then to find good external funding partners to help bring each business to a semi-autonomous state.

In prior roles inside Intel, Andre has worked in equipment negotiations, treasury accounting, risk management, and helped start up Intel’s Automotive Solutions Division.  Andre regularly teaches many of Intel’s advanced financial valuation classes, such as Real Options, Monte Carlo analysis and Decision tree analysis.  Prior to Intel, Andre was the director of an independent video games developer.

Andre lives in Scottsdale, AZ with his two children (aged 4 and 6) and his wife (age not disclosed).  Between work and kids, there isn’t much free time, but in the past Andre has enjoyed kickball, motorcycles, rugby and polo.

John D. McKenzie
Founder, Innovastat

John McKenzie, founder of Innovastat, has extensive experience in teaching and consulting in the areas of Monte Carlo simulation, optimization under uncertainty, forecasting, and inferential statistics. He is teaching a graduate class at the University of Colorado at Boulder this fall semester in the Information and Communication Technology for Development Program at the ATLAS Institute. His class, held in the computer lab, is using the Palisade’s DecisionTools Suite to model development strategies.

Sam McLafferty
President and CEO, Palisade Corporation

Sam McLafferty is Palisade's founder, president, and CEO. He started the company in 1984 with the release of PRISM, a stand-alone Monte Carlo simulation package for DOS on the PC. PRISM later evolved into @RISK for Lotus 1-2-3, and then for Excel. Sam is Palisade's lead developer, with over thirty years of programming experience. He works closely with the technical and sales staff, ensuring that customer feedback is heard. He personally oversees the development and evolution of every one of the fifteen software products Palisade sells. Prior to Palisade, he was a risk analysis consultant.

Roy Nersesian
Associate Professor of Management, Monmouth University
Associate Professor, International and Public Affairs, Columbia University

Roy Nersesian is a graduate of Rensselaer Polytechnic Institute and Harvard Business School. He is a tenured professor at the Leon Hess School of Business at Monmouth University and an adjunct professor at the School of International and Public Affairs at Columbia University. His three recently published manuals by Palisade were drawn from his experience in evaluating projects from a financial perspective in private industry and his experience in teaching operations management at Monmouth University.

Jay O’Connor
Director, Turner & Townsend Inc.

With over 25 years of experience in the areas of estimating, planning and quantitative risk analysis for international projects, Jay understands the complexities that are associated with identifying and assessing project risks. His experience includes both the owner’s and contractor’s side of engineering and construction projects. He has worked in the upstream and downstream oil and gas industry sectors and the pulp and paper sector. His career has taken him to the United Kingdom, Japan, Indonesia, Malaysia, Singapore and Australia.

Dr. Javier Ordóñez
Director of Custom Solutions, Palisade Corporation

Dr. Javier Ordóñez holds a BS in Civil Engineering from the Universidad de Cuenca, Ecuador and a MS in Project Management from the University of Maryland. Javier earned his PhD from the University of Maryland performing research on project risk analysis. His current research deals with cost and schedule integration and correlation issues through the use of Bayesian belief networks.

Javier's experience is in the areas of construction and project management, optimal project and capital investments selection, earned value management, engineering and project risk analysis, and operations research applications to engineering and management problems.

Javier has taught as an adjunct professor in the Project Management Program at University of Maryland and provides training in risk and decision analysis. He is also registered as a Project Management Professional (PMP).

Mitul Parikh
Senior Engineer, PMA Consultants

Mr. Mitul Parikh, PE, PMP of PMA Consultants LLC is a senior engineer with over 8 years experience in cost control control, cost estimating, scheduling management, claims analysis, risk management, project engineering and inspection and project supervision.  His project experience includes infrastructure, residential and commercial projects.

Mr. Parikh has performed cost and schedule risk analysis on more than 30 infrastructure projects, including roads, tunnels, airports, bridges, and ports totaling more than $1.5B. In addition, he has been part of the internal team that launched and implemented the Risk Management Practice within the Port Authority of NY & NJ, and he has actively participated in the review of the Project Risk Management section of the PANYNJ’s Project Management Manual of Standards and Procedures.

He holds a B.S. in Civil Engineering, and a M.S. in Construction Management. He is also a Professional Engineer, and a certified Project Management Professional.

Vijen Patel
Senior Financial Reporting Analyst, Walgreen

Originally a native of India, Vijen earned his Bachelors of Pharmacy from K.L.E.S. College of Pharmacy, Bangalore, India and MBA in Healthcare Administration from Benedictine University in Lisle, Illinois. He began his career as an entrepreneur in the packaged foods industry. After moving to the U.S., he joined Walgreen Co as pharmacy tech in early 2006. Vijen used his knowledge of pharmacy, technology and customer service to advance within the company. Most recently, Vijen was named the Team Lead for Reporting & Analytics within Walgreen’s Pricing and Contracting group. Vijen works daily with numerous departments across the company, analyzing large datasets and providing valuable insight into payor analytics.

David Perkins
Associate Professor, Grand Canyon University

Dr. David Perkins, PMP is an Associate Professor of Business at Grand Canyon University in Phoenix, Arizona.  He primarily teaches statistics, operations management, and quantitative methods courses.  Dr. Perkins has 17 years of industry experience in project management and systems engineering disciplines. He has worked in both defense and commercial sectors. Dr. Perkins has held Project Manager and Project Analyst positions at MicroAge, National Computer Systems, Motorola and General Dynamics.

Dr. Perkins holds a Doctor of Business Administration (DBA) degree in Management from Anderson University in Anderson, Indiana. He holds Master of Business Administration (MBA) and Master of Technology degrees from Arizona State University. Dr. Perkins's primary research interests include selected aspects of project communications and project analytics. He is also a certified Project Management Professional (PMP) and has published articles in selected project management publications including PM Network and Project Manager Today. One of his articles also appears in the book People in Projects. Dr. Perkins has also been a guest speaker at various Project Management Institute (PMI) Chapter meetings in Arizona, California, and Utah.

Dr. Perkins also provides statistics and project analytics consulting services.  More information is available at www.davidperkinsdba.com

Andrew Pulvermacher
Territory Finance Manager, BestBuy

Andrew is a Territory Finance Manager for Best Buy. He is the recipient of “Best Buy’s Brad Anderson Legacy Stock” awarded by the company’s Board of Directors and awarded “Outstanding Contribution to Financial Services’ Success” for his work in applied statistical analysis. Andrew is was included in InBusiness Magazine’s “40-Under-40” Class of 2011. He holds a BBA in Accounting and Corporate Finance from the University of Wisconsin – Eau Claire and a MBA in Operations and Technology Management from the University of Wisconsin.

Matthew H. Rosenberg, CPA, CFA
Managing Partner, RoseCap Investment Advisors, LLC

Mr. Rosenberg is Managing Partner for RoseCap Investment Advisors, LLC, a private investment management and financial planning firm in Boulder, CO. Among other things, his responsibilities include portfolio management, formulating investment strategy, and development of financial models for use by the firm. Throughout his career Mr. Rosenberg has developed financial models for numerous large and small companies across multiple asset classes/sectors, investment vehicles, and asset types.

Prior to founding RoseCap, Mr. Rosenberg was Managing Director with Jackson Oats Shaw Corporate Real Estate, a privately held real estate firm in Atlanta, GA. Mr. Rosenberg also previously served as Vice President/AE with General Electric ‘s Commercial Finance Division. He started his career in investment banking, underwriting and syndicating leveraged loans and high yield bonds for Wachovia Securities in Charlotte, NC.

Mr. Rosenberg received his Masters degree in Accounting and Bachelor of Business Administration from The University of Texas, at Austin, where he was also a member of the 2002 National Championship baseball team. He enjoys reading and competing in numerous sports, and also serves as a lecturer of finance, investments, and accounting for Colorado Mesa University, in Grand Junction, CO.

Mark Rudd
President, Rudd Asset Management

BSE in Nuclear Engineering from Purdue University; MBA from The University of Chicago.

Mark Rudd is founder and President of Rudd Asset Management, an energy consulting company. With nearly 40 years in the electric power generation business, he brings experience in nuclear, coal, natural gas, and hydro generation.

As a long time user of Palisade software, he is a strong believer of the value of applying statistics and economics to the world of technology. The ability to identify technical options, to apply stochastic modeling, and to compare the resulting economics is just as meaningful to power generation as any other business. Creative use of Palisade software makes that possible.   

Steven Slezak
Professor, California Polytechnic State University

Steven Slezak has nearly 30 years experience in strategic business planning and in financial planning and analysis. He has utilized Palisade software since 1998. His consulting practice serves clients in health care, agribusiness, and education. He has particular expertise in financial and market risk management, and has worked as a risk manager for energy companies and a Chicago trading firm.

Mr. Slezak is also a Lecturer in the College of Agriculture, California Polytechnic State University, San Luis Obispo, where he teaches finance and credit, strategic planning, linear programming, and trade and development. He has also taught fixed income securities and business calculus at Cal Poly. He previously taught corporate financial management and financial mathematics at the Carey Business School at Johns Hopkins University.

He holds a BS in international studies from Georgetown University and an MBA in Finance from Johns Hopkins University.

Allan Smith
Financial Business Advisor, Scottsdale Insurance Group

Allan Smith holds a BBA with a concentration in finance from the University of Massachusetts. He also holds an MBA with a concentration in finance along with an MS in economics from the WP Carey School of Business at Arizona State University.

For the past 5+ years, Allan has worked for the Scottsdale Group Insurance Company working with risk adjusted capital in an insurance setting. He is responsible for analyzing new product opportunities as well as current product offerings. Along with his awesome team mates, he has developed a Policy Year basis RAROC metric that allows for comparison between product opportunities and to better understand the profitability of current product results.

Allan has also worked in the manufacturing, distribution and retail sectors performing various financial analysis as well as 6 years self employed. Currently, in his spare time, he teaches undergraduate level Microeconomics & Macroeconomics, and has also taught Research Methods and Environmental Science (economics).

Allan is married, has 2 beautiful daughters and currently resides in Chandler, AZ.

Dr. William Strauss
President, FutureMetrics, LLC
Managing Partner, FutureEnergy Partners, LLC

Dr. William Strauss is the founder and president of FutureMetrics.  FutureMetrics is the recognized leading US consultancy in the economics of the production and use of biomass fuels.  Dr. Strauss is also a founder and a Director of Maine Energy Systems. Maine Energy Systems’ (MESys) primary mission is to support a transition to the use of renewable wood pellet fuel for heating of homes and businesses.

Bill Strauss is the chief economist for the Biomass Thermal Energy Council (Washington, DC) and is the chief economist for the Maine Pellet Fuels Association. Bill served as the chief economist on the Maine Governor’s Wood-to-Energy Task force in 2008-2009. 

He has an MBA (specializing in Finance) and a PhD (Economics and Earth Systems Science) both from the University of New Hampshire.

Bill has published a book titled The Myth of Endless Growth: Exposing Capitalism’s Unsustainablity (ISBN 978-0-557-62496-6).

Bill enjoys mountain biking in the summer and skiing in the winter.  He has logged more than one million vertical feet helicopter skiing in British Columbia, Canada.

Chris Taber
Associate Director, Commercial Analytics, Ikaria

Chris Taber is the Associate Director, Commercial Analytics at Ikaria, Inc. where he is responsible for all strategic and commercial analysis including sales performance and forecasting, drug development portfolio development and decision analysis, clinical trial patient modeling, and pricing and contracting analysis. Prior to joining Ikaria, Chris spent nearly ten years in management consulting with Oliver Wyman (previously Mercer Management Consulting), IBM Business Consulting Services, and PricewaterhouseCoopers, with a focus on customer-centric analysis of processes & systems in retail and transportation industries. He also worked with the Burlington Coat Factory to develop corporate strategy, data analytics, performance management and financial reporting.

Chris has an MBA in Finance from University of Texas and an AB in Anthropology from Princeton University.

Thompson Terry
Senior Training Consultant, Palisade Corporation

Thompson Terry is a senior member of Palisade’s training and consulting staff. With more than 15 years of experience at Palisade, including eight in technical support, he is recognized as an expert in all Palisade software products and their applications.

Thompson has led numerous training seminars for hundreds of professionals on risk and decision analysis, and provided customized onsite training in a variety of industries including insurance, manufacturing, pharmaceuticals, defense, and food safety. Clients Thompson has trained include: The Hartford, Unilever, Duratek, Eastman Chemical, Canadian Food Inspection Agency, National Rail (UK), RWE Thames Water (UK), National Gas Company of Trinidad & Tobago, Stone & Webster, and Northrop-Grumman.

Thompson holds a BS in Agricultural Economics from Cornell University with specializations in economics, marketing, and finance.

Seth Traubenberg
Sr. Analyst, Tools & Systems, Walgreens

Born in Cleveland, Ohio, and raised in Rockford, Illinois, Seth earned his Finance and Master’s degrees from Northern Illinois University. He began his career with Graybar Electric Company in Glendale Heights, Illinois, and has worked for such companies as Insight Corporate Communications, Sony and AT&T. In 2006, Seth joined Walgreens as an analyst within the Walgreens Health Services division, eventually moving to a senior role in the Pricing and Contracting group. Seth is now engaged with various departments across Walgreens, providing assistance in understanding and analyzing datasets and enhancing existing processes by building custom Excel-based solutions for end users. As the first user of @RISK within Walgreens, Seth is combining his model-building expertise with the stochastic capabilities of @RISK to enable better insight into the numbers and more informed decision making at the senior management level.

Poh-Boon Ung
Principal Economist, ARCADIS

Mr. Poh Boon Ung is a Principal Economist with ARCADIS and specializes in environmental economics and environmental business consulting related issues. He manages projects related to water and air regulatory programs and has prepared cost-benefit assessments for different environmental regulations involving power generating stations, off-road engines, and other environmental impacts from air emissions. He is also experienced in conducting economic impact assessments and natural resource damage assessments (NRDAs). Mr. Ung is also a member of the ARCADIS guaranteed remediation (GRiP) team where he performs probabilistic evaluations of costs and quantifies the risks of different pricing bids. One of his areas of expertise is in application of probabilistic modeling techniques and quantitative decision analysis. He has helped numerous clients identify optimal strategies in light of uncertainties for various environmental issues. Mr. Ung holds an M.A. in Economics from the University of Michigan and a B.A. in Economics and Mathematics from Brandeis University, summa cum laude, where he is a member of Phi Beta Kappa.

John G. Wachter
Principal Consultant, Wachter Consulting LLC

John G. Wachter is the owner and Principal Consultant for Wachter Consulting LLC. Mr. Wachter has over 25 years of experience as an engineer, project manager, and consultant for over $10B of project activity in the chemicals, fibers, pharmaceuticals, biotechnology, consumer healthcare, pulp and paper, steel-making, upstream oil and gas, nuclear power generation and downstream oil refining industries. John has a reputation as acting as an “honest broker” between parties and as such he has provided Independent Project Reviews including Cost and Schedule Risk Analysis for over 40 projects with an estimated TIC of over 3.5BB within the past five years.

Erik Westwig
Software Engineer, Palisade Corporation

Erik Westwig received his BS in 1991 and MS in 1994 from the applied and engineering physics department at Cornell University. In 1998 he published the book Mathematical Physics with co-author Bruce Kusse, which was re-released in its second edition in 2006. Since 1995, Erik has worked as a software engineer at Palisade as part of the DecisionTools Suite development team.

 

 


 


 

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