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Case Studies
Finance
Albert Fensterstock Associates
Product: NeuralTools
Application: Credit and debt risk analysis
Benemerita Universidad Autonoma de Puebla
Product: @RISK
Application: Derivatives Pricing
Cynametrix
Product: DecisionTools Suite
Application: Portfolio Optimization including IDB
Federal Home Loan Bank of Indiana
Product: @RISK
Application: Portfolio Credit Risk
FiduciaryVest
Product: @RISK
Application: Asset Allocation, Value-at-Risk
George Washington University
Product: @RISK & RISKOptimizer
Application: Debt Portfolios, Capital Investments
London Business School /
Novartis Pharmaceutical

Product: @RISK, PrecisionTree, RISKOptimizer, DecisionTools Suite
Application: Portfolio Management
LStar Capital
Product: @RISK
Application: Risk Quantification in Film Financing
Merck
Product: @RISK
Application: Value-at-Risk Exchange Rate
Netconomy
Product: @RISK
Application: Budget Forecasting
Nighthawk Intelligence
Product: DecisionTools Suite
Application: Private label credit card (PLCC) accounts for major electronics retailer
Pellegrino & Associates
Product: @RISK
Application: Intellectual Property Valuation
Performance Thinking & Technologies
Product: @RISK & RISKOptimizer
Application: Hedge Fund management
Procter & Gamble
Product: @RISK, PrecisionTree, DecisionTools Suite
Application: Production Siting, New Product Analysis, Exchange Rate Analysis, Real Options
Risqworx
Product: @RISK
Application: Calculating investment risk and ROI
Rusnano
Industry: Finance/Banking
Application: Private equity investment in nanotechnology
RoseCap Investment Advisors
Product: @RISK
Application: Valuation of Direct Investment
Solis Financial Forensics LLC
Product: @RISK
Application: Projecting Economic Damages for Attorneys Involved in Complex Lawsuits

READ ALSO
In Academic:
Swinburne University of Technology
Product: @RISK
Application: Venture Capital Management
In Energy:
Cinergy
Product: @RISK
Application: Acquisitions Analysis
Grupo ISA
Product: @RISK
Application: Investment Analysis
In Government:
Her Majesty's Prison Service
Product: @RISK
Application: Cash Flow Analysis
In Insurance/Reinsurance:
Society of Actuaries /
Casualty Actuary Society

Product: @RISK
Application: Pension and Insurance Planning

SEE ALSO: INDUSTRY MODELS
» Finance/Banking Models
Recently Added
Johns Hopkins and Interdisciplinary Solutions, LLC
Product: @RISK
Application: Pandemic Preparedness
Industry: Healthcare/Pharmaceutical
Kinder Morgan / Riskcore Ltd.
Product: @RISK
Application: Modelling project cost contingency and escalation
Industry: Energy & Utilities
Federal Home Loan Bank of Indiana
Product: @RISK
Application: Portfolio Credit Risk
Industry: Finance/Banking
Red Leaf Resources
Product: @RISK
Application: Developing new oil shale technologies
Industry: Energy & Utilities
Sinopec Engineering (Group) Co., Ltd (SEG)
Product: @RISK
Application: Evaluate petroleum and petrochemical projects valued over US$100m
Industry: Energy
Tesla Consultants
Product: @RISK
Application: Assessing Needs for Equipment Upgrades
Industry: Utilities
University of Adelaide
Product: @RISK
Application: Prediction of metal corrosion in salt water
Industry: Academic
University of Tasmania
Product: @RISK
Application: Evaluating production strategies for salmon farming
Industry: Agriculture/Aquaculture
National Grid UK
Product: @RISK
Application: Modeling electricity network restoration performance
Industry: Energy & Utilities
Solis Financial Forensics LLC
Product: @RISK
Application: Projecting Economic Damages for Attorneys Involved in Complex Lawsuits
Industry: Financial Forensics
CONTI-Group
Product: @RISK
Application: Financial Planning for Shipping Investment Funds
Industry: Shipping/Transport
Major Utility in Eastern US
Product: The DecisionTools Suite
Application: Load Forecasting
Industry: Utilities
Amway
Product: Custom Development
Application: Long-Range Capacity Planning
Industry: Manufacturing
L.E. Peabody & Associates
Product: @RISK
Application: Real Option Valuations of Power Plants
Industry: Energy & Utilities
Louisiana Department of Health
Product: Custom Development
Application: Large-scale Hospital Evacuation Planning
Industry: Government
Pellegrino & Associates
Product: @RISK
Application: Intellectual Property Valuation
Industry: Finance
Integral Consulting
Product: @RISK
Application: Mine Remediation
Industry: Environmental
University Of Victoria
Product: @RISK
Application: Lifetime Excess Cancer Risk
Industry: Academic
Rusnano
Product: The DecisionTools Suite
Application: Private equity investment in nanotechnology
Industry: Finance
MRAG Asia Pacific
Product: @RISK
Application: Quantifying Illegal Fishing
Industry: Environment
Netconomy
Product: @RISK
Application: Budget Forecasting
Industry: Finance
Department of Energy and Climate Change
Product: @RISK
Application: Carbon emission forecasts
Industry: Government
Academic
Brazilian Petroleum Institute
Product: @RISK
Application: Oil Exploration
Bucknell University
Product: PrecisionTree
Application: Technology Implementation
Cambridge University
Product: @RISK
Application: Climate Change
Columbia University
Product: @RISK
Application: Energy and Public Policy
Cornell University
Product: @RISK
Application: Financial Management
Curtin University of Technology
Product: @RISK
Application: Statistical analysis
DePaul University/Advanced Analytics LLC
Product: DecisionTools Suite
Application: Sports Wagering
Illinois State University
Product: @RISK
Application: Pharmaceutical R&D, Net Present Value, Internal Rate of Return
Illinois State University
Product: @RISK
Application: Real Options and Finance
INCAE Business School
Product: @RISK
Application: Finance and Capital Markets
Johnson Graduate School of Management, Cornell University
Product: @RISK
Application: Election Forecasting
Missouri University of Science and Technology
Product: @RISK
Application: Mining Engineering
Pace University
Product: StatTools, DecisionTools Suite
Application: Operations Research
Shanghai Jiao Tong University
Product: DecisionTools Suite
Application: Engineering system design and optimization
Swinburne University of Technology
Product: @RISK
Application: Venture Capital Management
Technical University of Denmark
Product: @RISK
Application: Transportation research
Tulane University
Product: @RISK
Application: Food Safety
University of Adelaide
Product: @RISK
Application: Prediction of metal corrosion in salt water
University of Houston
Product: DecisionTools Suite
Application: Managerial Decision Making
University of London Royal Veterinary College / EpiX Analytics
Product: @RISK
Application: Health and food safety
University Melbourne
Product: @RISK
Application: Forecasting Dairy Operating Profits
University of New Brunswick
Product: @RISK
Application: Reducing Environmental Impact of Commercial Aquaculture
University of Pennsylvania
Product: DecisionTools Suite
Application: Organizational Dynamics
University of Pretoria
Product: DecisionTools Suite, @RISK, TopRank
Application: Viral Exposure
University of Toronto
Product: DecisionTools Suite
Application: Financial Management
University Of Victoria
Product: @RISK
Application: Lifetime Excess Cancer Risk
University of Witwatersrand
Product: @RISK
Application: Mining Engineering
Virginia Commonwealth University
Product: @RISK
Application: Value at Risk Analysis

READ ALSO
In Agriculture:
Cornell University / Purdue University
Product: @RISK
Application: Agriculture Policy Assessment
University of Buenos Aires
Product: @RISK
Application: Agricultural Investment
University of Tokyo
Product: @RISK
Application: Agriculture
In Environment:
Cornell University /
Lower Colorado River Authority

Product: @RISK
Application: Natural Resource Mgmt
In Energy:
Cranfield University
Product: @RISK
Application: Equipment Reliability
In Finance:
London Business School /
Novartis Pharmaceutical

Product: @RISK, PrecisionTree, RISKOptimizer, DecisionTools Suite
Application: Portfolio Management
In Medical:
Royal Veterinary College
Product: @RISK
Application: Disease Prevention
Energy & Utilities
Abu Dhabi Water &
Electricity Company

Product: @RISK
Application: Demand Forecasting
Águas do Douro e Paiva
Product: @RISK
Application: Cost Reduction
Alesco Risk Management
Services Limited

Product: @RISK
Application: Risk modelling to determine optimum risk financing and insurance strategies
BC Hydro
Product: @RISK
Application: Project Analysis
Bigen Africa
Product: @RISK
Application: Demand and Cost Forecasting
Blade Energy
Product: @RISK
Application: Drilling Productivity
Carnegie Mellon University / Pittsburgh Technical
Product: @RISK
Application: Mitigating project schedule and cost overrun risk
Cinergy
Product: @RISK
Application: Acquisitions Analysis
Cranfield University
Product: @RISK
Application: Equipment Reliability
Det Norske Veritas (DNV)
Product: @RISK
Application: ROI of Different Projects
ECN
Product: @RISK
Application: Financial analysis of offshore wind farms
Enex
Product: DecisionTools Suite
Application: Project Planning
Fitness First
Product: @RISK, RISKOptimizer
Application: Energy Budget Resilience Optimization
Fluor Corporation
Product: @RISK
Application: Oil and Gas Estimating
Futuremetrics
Product: @RISK
Application: Price Hedging
Grupo ISA
Product: @RISK
Application: Investment Analysis
Hydroelectric Power in Colombia
Product: @RISK
Application: Cost estimation
IHS Energy Group
Product: @RISK Developer Kit
Application: Exploration, Drilling, and Production Analysis
Integrating Renewables with Electricity Storage
Product: @RISK
Application: Energy supply and Electricity Demand
Kinder Morgan / Riskcore Ltd.
Product: @RISK
Application: Modelling project cost contingency and escalation
L.E. Peabody & Associates
Product: @RISK
Application: Real Option Valuations of Power Plants
Major Utility in Eastern US
Product: The DecisionTools Suite
Application: Load Forecasting
Metaproject
Product: @RISK, PrecisionTree
Application: Rescue Operations
National Grid UK
Product: @RISK
Application: Modeling electricity network restoration
Northern Indiana
Public Service Company

Product: @RISK, Evolver, RISKOptimizer
Application: Pricing, Production Allocation for Regulation Compliance
Petrobras
Product: @RISK
Application: Exploration & Production
Red Leaf Resources
Product: @RISK
Application: Developing new oil shale technologies
RiskAdvisory
Product: @RISK Developer Kit
Application: Energy Production and Pricing
Rudd Asset Management (RAM)
Product: @RISK
Application: Waste disposal and renewable energy
Sark7
Product: Decision Tools Suite (@RISK, Precision Tree and Evolver)
Application: Optimising the business case for sustainable energy projects
Sinopec Engineering (Group) Co., Ltd (SEG)
Product: @RISK
Application: Evaluate petroleum and petrochemical projects valued over US$100m
Tesla Consultants
Product: @RISK
Application: Assessing Needs for Equipment Upgrades
Tioga Energy
Product: @RISK
Application: Solar energy savings
Transelectrica
Product: @RISK
Application: Measuring and Mitigating Open Market Risk
WEnergy Global
Product: @RISK
Application: Return on Investment

SEE ALSO:
Halcrow
Product: @RISK
Application: Flood Protection

SEE ALSO: INDUSTRY MODELS
» Energy Models

Environment
Air and Waste Management Association
Product: @RISK
Application: Estimating vehicles on congested roads
Aspinall & Associates
Product: @RISK, PrecisionTree, DecisionTools Suite
Application: Disaster Planning
AECOM
Product: @RISK
Application: Climate Change and Flooding Risk Assessment
Bristol’s Environmental Risk Research Centre (BRISK)
Product: DecisionTools Suite
Application: Disaster Planning
Cornell University /
Lower Colorado River Authority

Product: @RISK
Application: Natural Resource Management
Greenup Locks and Dam
Product: @RISK
Application: Dam maintenance and repair
Halcrow
Product: @RISK
Application: Flood Protection
Halcrow Group Ltd /
UK Environment Agency

Product: @RISK
Application: Flood Management
Integral Consulting
Product: @RISK
Application: Mine Remediation
Kennecott Utah Copper
Product: @RISK
Application: Pollution Cleanup
MRAG Asia Pacific
Industry: Environment
Application: Quantifying Illegal Fishing
NOAA Fisheries
Product: @RISK
Application: Estimating effects of dams on Atlantic salmon population dynamics
Purdue University
Product: @RISK
Application: Cost-benefit analysis of biofuel production under two government policies
Triangle Economic Research
Product: @RISK, PrecisionTree
Application: Pollution Cleanup
University of California, Berkeley
Product: @RISK
Application: Modeling extinction risk for Endangered Species
World Conservation Union
Product: @RISK, PrecisionTree, DecisionTools Suite
Application: Endangered Species Protection

READ ALSO
In Academic:
Cambridge University
Product: @RISK
Application: Climate Change
Sark7
Product: Decision Tools Suite (@RISK, Precision Tree and Evolver)
Application: Optimising the business case for sustainable energy projects
In Agriculture:
World Aquatic Veterinary Medical Association (WAVMA)
Product: @RISK
Application: Helping aquatic farmers to make informed choices that reduce risk of disease in their animals without extensive and costly testing
Finance
Albert Fensterstock Associates
Product: NeuralTools
Application: Credit and debt risk analysis
Benemerita Universidad Autonoma de Puebla
Product: @RISK
Application: Derivatives Pricing
Cynametrix
Product: DecisionTools Suite
Application: Portfolio Optimization including IDB
Federal Home Loan Bank of Indiana
Product: @RISK
Application: Portfolio Credit Risk
FiduciaryVest
Product: @RISK
Application: Asset Allocation, Value-at-Risk
George Washington University
Product: @RISK & RISKOptimizer
Application: Debt Portfolios, Capital Investments
London Business School /
Novartis Pharmaceutical

Product: @RISK, PrecisionTree, RISKOptimizer, DecisionTools Suite
Application: Portfolio Management
LStar Capital
Product: @RISK
Application: Risk Quantification in Film Financing
Merck
Product: @RISK
Application: Value-at-Risk Exchange Rate
Netconomy
Product: @RISK
Application: Budget Forecasting
Nighthawk Intelligence
Product: DecisionTools Suite
Application: Private label credit card (PLCC) accounts for major electronics retailer
Pellegrino & Associates
Product: @RISK
Application: Intellectual Property Valuation
Performance Thinking & Technologies
Product: @RISK & RISKOptimizer
Application: Hedge Fund management
Procter & Gamble
Product: @RISK, PrecisionTree, DecisionTools Suite
Application: Production Siting, New Product Analysis, Exchange Rate Analysis, Real Options
Risqworx
Product: @RISK
Application: Calculating investment risk and ROI
Rusnano
Industry: Finance/Banking
Application: Private equity investment in nanotechnology
RoseCap Investment Advisors
Product: @RISK
Application: Valuation of Direct Investment
Solis Financial Forensics LLC
Product: @RISK
Application: Projecting Economic Damages for Attorneys Involved in Complex Lawsuits

READ ALSO
In Academic:
Swinburne University of Technology
Product: @RISK
Application: Venture Capital Management
In Energy:
Cinergy
Product: @RISK
Application: Acquisitions Analysis
Grupo ISA
Product: @RISK
Application: Investment Analysis
In Government:
Her Majesty's Prison Service
Product: @RISK
Application: Cash Flow Analysis
In Insurance/Reinsurance:
Society of Actuaries /
Casualty Actuary Society

Product: @RISK
Application: Pension and Insurance Planning

SEE ALSO: INDUSTRY MODELS
» Finance/Banking Models
Recently Added
Johns Hopkins and Interdisciplinary Solutions, LLC
Product: @RISK
Application: Pandemic Preparedness
Industry: Healthcare/Pharmaceutical
Kinder Morgan / Riskcore Ltd.
Product: @RISK
Application: Modelling project cost contingency and escalation
Industry: Energy & Utilities
Federal Home Loan Bank of Indiana
Product: @RISK
Application: Portfolio Credit Risk
Industry: Finance/Banking
Red Leaf Resources
Product: @RISK
Application: Developing new oil shale technologies
Industry: Energy & Utilities
Sinopec Engineering (Group) Co., Ltd (SEG)
Product: @RISK
Application: Evaluate petroleum and petrochemical projects valued over US$100m
Industry: Energy
Tesla Consultants
Product: @RISK
Application: Assessing Needs for Equipment Upgrades
Industry: Utilities
University of Adelaide
Product: @RISK
Application: Prediction of metal corrosion in salt water
Industry: Academic
University of Tasmania
Product: @RISK
Application: Evaluating production strategies for salmon farming
Industry: Agriculture/Aquaculture
National Grid UK
Product: @RISK
Application: Modeling electricity network restoration performance
Industry: Energy & Utilities
Solis Financial Forensics LLC
Product: @RISK
Application: Projecting Economic Damages for Attorneys Involved in Complex Lawsuits
Industry: Financial Forensics
CONTI-Group
Product: @RISK
Application: Financial Planning for Shipping Investment Funds
Industry: Shipping/Transport
Major Utility in Eastern US
Product: The DecisionTools Suite
Application: Load Forecasting
Industry: Utilities
Amway
Product: Custom Development
Application: Long-Range Capacity Planning
Industry: Manufacturing
L.E. Peabody & Associates
Product: @RISK
Application: Real Option Valuations of Power Plants
Industry: Energy & Utilities
Louisiana Department of Health
Product: Custom Development
Application: Large-scale Hospital Evacuation Planning
Industry: Government
Pellegrino & Associates
Product: @RISK
Application: Intellectual Property Valuation
Industry: Finance
Integral Consulting
Product: @RISK
Application: Mine Remediation
Industry: Environmental
University Of Victoria
Product: @RISK
Application: Lifetime Excess Cancer Risk
Industry: Academic
Rusnano
Product: The DecisionTools Suite
Application: Private equity investment in nanotechnology
Industry: Finance
MRAG Asia Pacific
Product: @RISK
Application: Quantifying Illegal Fishing
Industry: Environment
Netconomy
Product: @RISK
Application: Budget Forecasting
Industry: Finance
Department of Energy and Climate Change
Product: @RISK
Application: Carbon emission forecasts
Industry: Government
DecisionTools Suite Cases
Aspinall & Associates
Industry: Environment
Application: Disaster Planning
Bristol’s Environmental Risk Research Centre (BRISK)
Industry: Environment
Application: Disaster Planning
Cal Poly, San Luis Obispo
Industry: Agriculture
Application: Financial Risk Management in Agriculture
Captum Capital
Industry: Healthcare/Pharmaceutical
Application: rNPV of New Companies and Technologies
Cynametrix
Industry: Finance
Application: Portfolio Optimization including IDB
DePaul University/Advanced Analytics LLC
Industry: Academia
Application: Sports Wagering
DNV GL SE
Industry: Shipping
Application: Risk and cost-benefit analysis to enhance the safety of ships and ship systems
Enex
Industry: Energy
Application: Geothermal Power Plant Equipment Procurement
Linksbridge SPC
Industry: Non-Profit
Application: Evaluating Efficacy of Public Health Initiatives
Logion BV
Industry: Transportation
Application: Transportation, Distribution, and Inventory Management
London Business School /
Novartis Pharmaceutical

Industry: Financing/Banking
Application: Portfolio Management
Major Utility in Eastern US
Industry: Utilities
Application: Load Forecasting
MegaFon
Industry: Telecommunications
Application: Enterprise Risk Management
Met-Mex Peñoles
Industry: Six Sigma
Application: Six Sigma Design of Experiments
Nighthawk Intelligence
Industry: Finance
Application: Private label credit card (PLCC) accounts for major electronics retailer
Novelis
Industry: Manufacturing
Application: Project Evaluation
PragmaRisk
Industry: Engineering, Construction
Application: Project cost and schedule risk analysis
Procter & Gamble
Industry: Academic
Application: Production Siting, New Product Analysis, Exchange Rate Analysis, Real Options
Rusnano
Industry: Finance/Banking
Application: Private equity investment in nanotechnology
Sark7
Industry: Sustainable energy (project consulting)
Application: Optimising the business case for sustainable energy projects
Shanghai Jiao Tong University
Industry: Finance
Application: Engineering system design and optimization
Triangle Economic Research
Industry: Environment
Application: Pollution Cleanup
Unilever
Industry: Manufacturing
Application: Product launch, capex, and many others
University of California San Diego School of Medicine
Industry: Healthcare / Pharmaceutical
Application: Public Health screening
University of Houston
Industry: Energy, Finance, Medical, and more
Application: Managerial Decision Making
University of Toronto
Industry: Academic
Application: Financial Management
University of Pretoria
Industry: Sciences
Application: Viral Exposure
World Conservation Union
Industry: Environment
Application: Endangered Species Protection

SEE ALSO
In StatTools:
Pace University
Industry: Academic
Application: Operations Research

In @RISK:
Northern Indiana
Public Service Company

Industry: Energy
Application: Pricing, Production Allocation for Regulation Compliance


@RISK Cases
Abu Dhabi Water &
Electricity Company

Industry: Energy and Utilities
Application: Demand Forecasting
African Risk Capacity (ARC)
Industry: Insurance/Reinsurance
Application: Assessing Catastrophic Drought Risk
Air and Waste Management Association
Industry: Environment
Application: Estimating vehicles on congested roads
Alesco Risk Management
Services Limited

Industry: Energy
Application: Risk modelling to determine optimum risk financing and insurance strategies
Amway
Services Limited

Industry: Manufacturing
Application: Long-Range Capacity Planning
Analytics
Industry: Academic
Application: Health and food safety
Águas do Douro e Paiva
Industry: Energy
Application: Cost Reduction
AgustaWestland
Industry: Aerospace
Application: New product development, feasibility studies, business initiatives
Antea Group
Industry: Environment
Application: Cost Justification of Water Recycling Systems
ARC of Yates
Industry: Non-Profit
Application: Budget Forecasting
AECOM
Industry: Environment
Application: Climate Change and Flooding Risk Assessment
BC Hydro
Industry: Energy
Application: Project Analysis
Benemerita Universidad Autonoma de Puebla
Industry: Finance
Application: Derivatives Pricing
Bigen Africa
Industry: Energy & Utilities
Application: Demand and Cost Forecasting
Blade Energy
Industry: Energy
Application: Drilling Productivity
Brazilian Petroleum Institute
Industry: Academic
Application: Oil Exploration
Broadleaf Capital International
Industry: Mining
Application: Schedule and Cost Risk, Project Management
Cambridge University
Industry: Academic
Application: Climate Change
Carnegie Mellon University / Pittsburgh Technical
Industry: Nuclear Energy / Energy Infrastructure
Application: Mitigating project schedule and cost overrun risk
Centre for Traffic
& Transport, Denmark

Industry: Transportation
Application: Transportation Planning
Cinergy
Industry: Energy
Application: Acquisitions Analysis
City of Edmonton / SMA Consulting
Industry: Transportation / Government
Application: Project management
Columbia University
Industry: Academic
Application: Energy and Public Policy
CONTI-Group
Industry: Shipping/Transport
Application: Financial Planning for Shipping Investment Funds
Cornell University
Industry: Academic
Application: Financial Management
CP Risk Solutions/
Illinois State University

Industry: Insurance
Application: Reinsurance Strategy
CP Risk Solutions/Illinois State University
Industry: Manufacturing
Application: Factory Shutdown
Cranfield University
Industry: Energy
Application: Equipment Reliability
Cornell University/
Lower Colorado River Authority

Industry: Environment
Application: Natural Resource Mgmt
Cornell University
Industry: Agriculture
Application: Agriculture Policy Assessment
Cummins Inc.
Industry: Six Sigma
Application: Six Sigma Quality Analysis
Curtin University of Technology
Industry: Academic
Application: Statistical analysis
Department of Energy and Climate Change
Industry: Government
Application: Carbon emission forecasts
Deloitte
Industry: Insurance/Reinsurance
Application: Cell Captive Insurance
Deloitte AIS
Industry: Insurance/Reinsurance
Application: Financial Planning for Environmental Rehabilitation
Det Norske Veritas (DNV)
Industry: Energy
Application: ROI of Different Projects
DNV GL
Industry: Energy
Application: Project Risk Management, Enterprise Risk Management, SHE Risk Management, Operational Risk Management
ECN
Industry: Energy research organisation
Application: Financial analysis of offshore wind farms
ENGCOMP
Industry: Government/Defense
Application: Budgeting
Federal Highway Adminstration
Industry: Transportation
Application: Pavement Cost Analysis
Federal Home Loan Bank of Indiana
Industry: Finance
Application: Portfolio Credit Risk
FiduciaryVest
Industry: Finance
Application: Asset Allocation, Value-at-Risk
Fitness First
Industry: Energy / Utilities
Application: Energy Budget Resilience Optimization
Fluor Corporation
Industry: Energy
Application: Oil and Gas Estimating
Fort McMurray Airport Authority (FMAA) / Revay and Associates Ltd.
Industry:Transportation
Application: Enterprise Risk Management (ERM)
Futuremetrics
Industry: Energy
Application: Price Hedging
Gemeente Hoorn
Industry: Government
Application: Urban Planning
Graphic Era University - Dehradun
Industry: Manufacturing
Application: Supply Chain Management
George Washington University
Industry: Finance
Application: Debt Portfolios, Capital Investments
Greenup Locks and Dam
Industry: Energy
Application: Dam maintenance and repair
Grupo ISA
Industry: Energy
Application: Investment Analysis
Halcrow
Industry: Energy & Utilities
Application: Flood Protection
Halcrow Group Ltd /
UK Environment Agency

Industry: Environment
Application: Flood Management
Her Majesty's Prison Service
Industry: Government
Application: Cash Flow Analysis
Hospital Clinic Barcelona
Industry: Medical
Application: Blood Screening
Hydroelectric Power in Colombia
Industry: Energy
Application: Cost estimation
Illinois State University
Industry: Academic / Pharmaceutical
Application: Pharmaceutical R&D, Net Present Value, Internal Rate of Return
Illinois State University
Industry: Academic
Application: Real Options and Finance
INCAE Business School
Industry: Academic
Application: Finance and Capital Markets
Integral Consulting
Industry: Environment
Application: Mine Remediation
Integrating Renewables with Electricity Storage
Industry: Energy & Utilities
Application: Energy Supply and Electricity Demand
JB Scherer Consulting Group LLC
Industry: Manufacturing
Application: Future Net Income Forecasting
Johns Hopkins and Interdisciplinary Solutions, LLC
Industry: Medical
Application: Pandemic Preparedness
Johnson Graduate School of Management, Cornell University
Industry: Academic / Politics
Application: Election Forecasting
Kewpie Corporation and University of Tokyo
Industry: Agriculture
Application: Food Safety
Katrina Disaster Response Center
Industry: Government
Application: Disaster Response Planning
Kennecott Utah Copper
Industry: Environment
Application: Pollution Cleanup
Kinder Morgan / Riskcore Ltd.
Industry: Energy & Utilities
Application: Modelling project cost contingency and escalation
KSU College of Veterinary Medicine
Industry: Agriculture
Application: Biosecurity to Avoid Disease Introduction
Kuwait Environment Public Authority
Industry: Government
Application: Air Quality
Larsen & Toubro Institute of
Project Management

Industry: Manufacturing
Application: Project Management
L.E. Peabody & Associates
Industry: Energy & Utilities
Application: Real Option Valuations of Power Plants
Lockheed Martin / NASA
Industry: Aerospace
Application: Schedule risk assessment
Louisiana Department of Health
Industry: Government
Application: Large-scale Hospital Evacuation Planning
LStar Capital
Industry: Finance
Application: Risk Quantification in Film Financing
Merck
Industry: Finance/Banking
Application: Value-at-Risk Exchange Rate
Missouri University of Science and Technology
Industry: Academic
Application: Mining Engineering
MRAG Asia Pacific
Industry: Environment
Application: Quantifying Illegal Fishing
Murray & Roberts
Industry: Construction
Application: Evaluating enterprise risks using risk modelling for a cash flow based approach
National Grid UK
Industry: Energy & Utilities
Application: Modeling electricity network restoration performance
Netconomy
Industry: Finance
Application: Budget Forecasting
New York City Department
of Health and Mental Hygiene

Industry: Medical
Application: Future Pandemic Planning
Northern Indiana
Public Service Company

Industry: Energy
Application: Pricing, Production Allocation for Regulation Compliance
NOAA Fisheries
Industry: Environment
Application: Estimating effects of dams on Atlantic salmon population dynamics
Pantektor AB
Industry: Construction
Application: Fire Risk Mitigation
Pareto Solutions
Industry: Government
Application: Budget Projection
Patrick Engineering / MBTA
Industry: Construction
Application: Cost and Schedule Risk Analysis
RD&I Consulting
Industry: Construction
Application: Fehmarn Belt Fixed Link
Pellegrino & Associates
Industry: Finance
Application: Intellectual Property Valuation
Petrobras
Industry: Energy
Application: Exploration & Production
Preformed Line Products
Industry: Manufacturing
Application: Tolerance Stacking
ProjectPMO
Industry: Aerospace
Application: Schedule and Cost Risk, Project Management
Post Danmark / PricewaterhouseCoopers
Industry: Government
Application: Insurance Premium Reduction
Purdue University
Industry: Environment, Government
Application: Cost-benefit analysis of biofuel production under two government policies
Red Leaf Resources
Industry: Energy & Utilities
Application: Developing new oil shale technologies
RisqWorx
Industry: Property
Application: Calculating investment risk and ROI
Royal Veterinary College
Industry: Medical
Application: Disease Prevention
RoseCap
Industry: Finance/Banking
Application: Valuation of Direct Investment
Rudd Asset Management (RAM)
Industry: Energy
Application: Waste disposal and renewable energy
Scottsdale Insurance Company
Industry: Insurance
Application: Comparing commercial properties; RAROC
Shanghai Food and Drug Administration
Industry: Government
Application: Food safety, monitoring contaminants
Sinopec Engineering (Group) Co., Ltd (SEG)
Industry: Energy
Application: Evaluate petroleum and petrochemical projects valued over US$100m
Slovak Rail Company
Industry: Transportation
Application: Capital Investment
Society of Actuaries/
Casualty Actuary Society

Industry: Insurance/Reinsurance
Application: Pension and Insurance Planning
Solis Financial Forensics LLC
Industry: Financial Forensics
Application: Projecting Economic Damages for Attorneys Involved in Complex Lawsuits.
Solvĕre
Industry: Transportation
Application: Transportation Infrastructure
Swinburne University of Technology
Industry: Academic
Application: Venture Capital Management
SzigmaSzervíz Ltd
Industry: Manufacturing
Application: Project Management
Technical University of Denmark
Industry: Academic
Application: Transportation research
Tesla Consultants, Delta Utilities
Industry: Utilities
Application: Assessing Needs for Equipment Upgrades
Thales Group
Industry: Manufacturing
Application: Market Feasibility
Tioga Energy
Industry: Energy
Application: Solar energy savings
Transelectrica
Industry: Power
Application: Measuring and Mitigating Open Market Risk
Transae/Réseau Ferré de France
Industry: Transportation
Application: PPP rail project financing
Transnet
Industry: Transportation
Application: Freight Transport
Tulane University
Industry: Academic
Application: Food Safety
UK Ministry of Defence
Industry: Defence
Application: Project Management
University of Adelaide
Industry: Academic
Application: Prediction of metal corrosion in salt water
University of Arkansas
Industry: Agriculture
Application: Analyzing Hybrid Varieties of Rice Crops
University of Buenos Aires
Industry: Agriculture
Application: Agricultural Investment
University of California, Berkeley
Industry: Environment
Application: Modeling extinction risk for Endangered Species
University Melbourne
Industry: Academic / Agriculture
Application: Forecasting Dairy Operating Profits
University of New Brunswick
Industry: Academic / Agriculture
Application: Reducing Environmental Impact of Commercial Aquaculture
University of Pennsylvania
Industry: Academic
Application: Organizational Dynamics
University of Texas Southwestern Medical Center
Industry: Health
Application: Evaluating kidney function for organ transplant
University of Tasmania
Industry: Agriculture/Aquaculture
Application: Evaluating production strategies for salmon farming
University of Tokyo
Industry: Agriculture
Application: Food safety, detection of BSE
University Of Victoria
Industry: Academic
Application: Lifetime Excess Cancer Risk
University of Witwatersrand
Industry: Academic
Application: Mining Engineering
US Army Materiel Systems Analysis Activity (AMSAA)
Industry: Government / Defense
Application: Schedule and Cost Risk for Acquisitions
Value Management Strategies, Inc.
Industry: Government, Manufacturing
Application: Project management, cost estimation, event risk
Virginia Commonwealth University
Industry: Academic
Application: Value at Risk Analysis
Visual Reporting / Danish Government / Agency for Digitisation
Industry: Government, IT
Application: Risk assessment of major IT projects
WEnergy Global
Industry: Energy
Application: Return on Investment
Wright Homes
Industry: Construction
Application: Real Estate Development
World Aquatic Veterinary Medical Association (WAVMA)
Industry: Environment
Application: Aquaculture and biosecurity

SEE ALSO: INDUSTRY MODELS
» Example Models

In DecisionTools Suite:
Aspinall & Associates
Industry: Environment
Application: Disaster Planning
Enex
Industry: Energy
Application: Geothermal Power Plant Equipment Procurement
Logion BV
Industry: Transportation
Application: Transportation, Distribution, and Inventory Management
London Business School /
Novartis Pharmaceutical

Industry: Financing/Banking
Application: Portfolio Management
Triangle Economic Research
Industry: Environment
Application: Pollution Cleanup
Procter & Gamble
Industry: Finance
Application: Production Siting, New Product Analysis, Exchange Rate Analysis, Real Options
World Conservation Union
Industry: Environment
Application: Endangered Species Protection

In @RISK Developer Kit:
London Underground / Istria
Industry: Transportation
Application: Transportation Safety and Investments

In Evolver:
Mettler Consulting
Industry: Insurance/Reinsurance
Application: Enterprise Resource Planning


FiduciaryVest Uses @RISK for Asset Allocation Modeling

Finance
Albert Fensterstock Associates
Product: NeuralTools
Application: Credit and debt risk analysis
Benemerita Universidad Autonoma de Puebla
Product: @RISK
Application: Derivatives Pricing
Cynametrix
Product: DecisionTools Suite
Application: Portfolio Optimization including IDB
Federal Home Loan Bank of Indiana
Product: @RISK
Application: Portfolio Credit Risk
FiduciaryVest
Product: @RISK
Application: Asset Allocation, Value-at-Risk
George Washington University
Product: @RISK & RISKOptimizer
Application: Debt Portfolios, Capital Investments
London Business School /
Novartis Pharmaceutical

Product: @RISK, PrecisionTree, RISKOptimizer, DecisionTools Suite
Application: Portfolio Management
LStar Capital
Product: @RISK
Application: Risk Quantification in Film Financing
Merck
Product: @RISK
Application: Value-at-Risk Exchange Rate
Netconomy
Product: @RISK
Application: Budget Forecasting
Nighthawk Intelligence
Product: DecisionTools Suite
Application: Private label credit card (PLCC) accounts for major electronics retailer
Pellegrino & Associates
Product: @RISK
Application: Intellectual Property Valuation
Performance Thinking & Technologies
Product: @RISK & RISKOptimizer
Application: Hedge Fund management
Procter & Gamble
Product: @RISK, PrecisionTree, DecisionTools Suite
Application: Production Siting, New Product Analysis, Exchange Rate Analysis, Real Options
Risqworx
Product: @RISK
Application: Calculating investment risk and ROI
Rusnano
Industry: Finance/Banking
Application: Private equity investment in nanotechnology
RoseCap Investment Advisors
Product: @RISK
Application: Valuation of Direct Investment
Solis Financial Forensics LLC
Product: @RISK
Application: Projecting Economic Damages for Attorneys Involved in Complex Lawsuits

READ ALSO
In Academic:
Swinburne University of Technology
Product: @RISK
Application: Venture Capital Management
In Energy:
Cinergy
Product: @RISK
Application: Acquisitions Analysis
Grupo ISA
Product: @RISK
Application: Investment Analysis
In Government:
Her Majesty's Prison Service
Product: @RISK
Application: Cash Flow Analysis
In Insurance/Reinsurance:
Society of Actuaries /
Casualty Actuary Society

Product: @RISK
Application: Pension and Insurance Planning

SEE ALSO: INDUSTRY MODELS
» Finance/Banking Models

Defining the Major Investment Challenge

Decision makers for all long term investment pools face a critical challenge, regardless of their level of sophistication: Multi-year allocation among the various asset categories available to investors. This particular decision is known to be the primary factor that will determine long-term portfolio outcomes. Adequate investment management within the underlying asset class is actually a secondary issue. That being said, the inherent question is: How can asset allocation decisions be made with strong confidence that the outcomes will be appropriate to a particular client’s desired/expected financial needs? There are actually two challenges here: (a) Despite the simplicity of this statement of need, an adequate solution is complex; however, (b) the solution must be communicated to decision makers in user-friendly form that will be consistently understood.

The challenge can be met by assembling the following elements:

  1. A large volume of historical market and economic data that is well catalogued and in significant detail.
  2. Significant investing knowledge and experience.
  3. Sophisticated software tools that are specifically designed for both historical pattern-identification and delivery of forecasted future outcomes, displayed in an easy-to-communicate graphic, probability format.

FiduciaryVest’s Approach

Gregg Buckalew, of FiduciaryVest, and Joe DiNunno, of Insightful Ideas, first started building asset allocation models that used the stochastic capabilities of @RISK in 1996. The partners typically build forecast models for three types of investment projects for clients: Defined Benefit Pension Plans, Hospital Balance Sheets, and Foundations/Endowments. 

FiduciaryVest’s asset allocation models are client-specific, and despite the high level of sophistication of these models, their clients do not need to have or acquire modeling expertise to contribute to them.  Instead FiduciaryVest establishes each client’s preferences by discussing the following considerations with them:

  1. The time horizon for achieving the client’s defined investment objectives.
  2. A prioritized set of investment outcome objectives within the client’s time horizon.
  3. A profile of the client’s risk tolerance, defined as exposure to “unacceptable outcomes” over the specified time horizon.
  4. For those situations that require an asset/liability analysis, financial models may include projected cash flows such as: pension plan liabilities, hospital expenses, or annual foundation distributions. By adding liabilities to the modeling equation, the partners are able to determine, for example: (a) the probability of a foundation being able to meet its distribution requirements, (b) the probability of a defined benefit plan being able to meet its pension obligations, or (c) whether the combination of a hospital’s cash flow with its portfolio income will be enough to meet its financial obligations over the next five years. (This optional analysis may include working with a client’s actuary or hospital management consultant).

Why They Turned to @RISK

The traditional approach to asset allocation has been to use efficient frontier models that seek to find the optimal portfolio mix that has the lowest possible level of risk (standard deviation) for its level of return (mean). When all asset class returns are assumed to follow the normal distribution, an efficient frontier model will yield risk vs. return results that are consistent with our simulation model over a one-year time frame. While this approach provides useful results, it still leaves many questions unanswered. This is where tools like @RISK and Monte Carlo simulation come into play.

To begin with, one feature of @RISK that DiNunno found very helpful in building financial models is its capacity to analyze historical data to determine a probability distribution for each asset class. Customarily, the normal distribution has been used to model asset classes. Using @RISK’s distribution fitting feature he found that, for example, both the income and total returns for bonds are better represented by the lognormal distribution than the normal distribution.

Another important motivation for choosing Monte Carlo simulation, in preference to the simpler optimization techniques of the efficient frontier model, is that it allows the user to realistically incorporate the effect of time horizons longer than one year. This is important because: (1) If volatile assets (e.g., stocks) are included in the model, then one-year modeling output has little chance of realism; (2) Consequently, users of modeling output that includes stocks and other volatile assets are forced to consider time horizons of at least 3-5 years; (3) @RISK’s probabilistic modeling output demonstrates to clients how multi-year time horizons increase the beneficial diversification effects of adding asset classes to the portfolio mix.

The Building Blocks Approach

The usefulness of any forecast (of anything) depends heavily on the quality of assumptions used to produce it. Beginning in 1996, Buckalew and DiNunno began to move away from strictly historical returns-based assumptions for long range future behavior of the various asset classes, in favor of a “building blocks” approach. The foundation of all building blocks is the market-determined current risk-free interest rate, for the forward period that the client determines is its investing time horizon. Beginning with that risk-free rate, successive layers are added to reflect each investment category’s known historical risks (reflected in its range/randomness of returns) and the returns attributed to those risks.  This method produces expected return characteristics for each asset class based on its historical pattern of returns relative to the risk-free rate, which makes the model’s assumption-set internally consistent and logical.  For the remaining two assumptions needed in forecasting (the variability of each category’s expected return, i.e., its standard deviation, and its cross correlation with each of the other categories’ returns), Buckalew and DiNunno believe there is strong evidence to support an assumption that long-term history is the most reliable predictor for those two factors.

Individual asset-class return assumptions are thus driven by the current risk-free rate, as well as the projected risk-free rate of return over the investment time horizon. For example, their most recent model’s “foundation block.” for constructing the expected returns of all asset classes, determined as of January 2009, was a 1 to 2% risk-free rate.  By comparison, the long-term historical risk-free rate has been 5 to 6%. The risk premium developed for each asset class is then added to this risk free rate to build the expected return used in their models.

While the partners update their asset allocation model assumptions on a regular basis to reflect current market conditions, the biggest change in recent years has been the movement from models that included 5-6 potential asset classes within a client portfolio (i.e. bonds, large cap stocks and small cap stocks) to models that may now include up to 20 different asset classes for potential investment (i.e. hedge funds, emerging markets, etc.). It is a relatively straightforward technique to review a correlation matrix, in order to understand the diversification benefits of adding a single asset class to a portfolio of just stocks and bonds.  When compared to getting a handle on the impact of escalating a portfolio of 5 or 6 asset class investments to a dozen or more, the benefits of a more robust analysis are immediately evident.

Lessons from the 2008 Finance Debacle

The financial crisis of 2008 convinced Gregg and Joe that it was time to look closer at the use of the normal distribution for modeling the probability of investment returns for equities. While the normal distribution assigns about 1 chance in 1000 for the stock market to experience a 3-standard-deviation decline, such as the market experienced in 2008, the reality is that a move of this magnitude occurs more frequently than that. Looking back at historical data, a move up or down of 3 standard deviations or more, over 6 months to a year, happens more like 1 out of every 100 time periods. The problem then is: How do you add 'Fat Tails' (outlier events that occur more frequently in reality than would be predicted by the normal distribution) to the model distribution in an effort to give the theoretical stock market a more realistic chance of experiencing one of these 'Black Swan' events? The solution, it turns out, was to use a combination of standard distributions that creates a simulated distribution that more closely resembles reality and provides more rational 'Fat Tails'.

Another revelation of the financial debacle in 2008 was the fact that correlations between most asset classes were, at least temporarily, much higher than expected. On the other hand, some of the asset classes that historically have had a low correlation with equities had positive returns for the year, a result that makes sense. With this in mind, Gregg and Joe took a closer look at how correlations between asset classes have changed over time. While some relationships were fairly consistent, others have been all over the map during the last 20 - 50 years. Since one of the major motivations for using financial modeling is to get a better handle on how a portfolio reacts when the financial system experiences severe stress, they used more conservative judgment in setting correlations, which resulted in using higher correlations between some asset classes than they had previously used.

Current Practice

In the wake of the events of 2008, Buckalew and DiNunno begin each client investment project with three important premises:

Premise 1: The forecasting of capital market outcomes is either: (a) useless and impossible, because the markets routinely exhibit extreme randomness of returns and absence of cross-correlation consistency, or (b) a reasonable exercise, when the forecast is made for a useful future period of sufficient length to allow significant abatement of short-term randomness.

Premise 2: Fast-moving, exogenous market trauma, whether triggered by one-off acts of international terrorism, or sudden systemic failure in the capital market system do not reduce the usefulness of multi-year mean/variance modeling output.

Premise 3: Although market events of 2008 were within the distribution range in FiduciaryVest’s previous modeling output, it is not within the model’s capability and purpose to attempt to forecast the timing of the model’s very low-probability occurrences (i.e., returns forecasted in the “tails” of model’s distribution output). Instead, Buckalew and DiNunno have recently developed other tools for that purpose. 

FiduciaryVest’s investment asset class assumption sets have a strong forecasting bias in favor of assumed central tendency, adjusted for the current cyclical stage at the time a portfolio model is created. The result is an internally consistent set of assumptions that run in a real-world modeling context to produce forecasted outcomes that are not only robust, but also practical for an average client decision-maker to understand and consider.

Incorporating longer time horizons and probability functions associated with asset classes, the partners were able to use @RISK to answer questions that cannot be addressed using static or optimized financial models:

  1. What is the probability of a negative return over a specific time period like 1 year, 3 years, 5 years, or 10 years?
  2. What is the probability of the client’s portfolio reaching (or not reaching) its targeted return over a give time period?
  3. What is the Value-at-Risk for an investment portfolio?
  4. What is the probability of meeting a client’s financial obligations without tapping into portfolio principal?

DiNunno says: “Using @RISK to get answers to these types of questions helps us give clients real-world insight into what to expect from their portfolio. More importantly, the models give our clients a strong indication of the impact that each component of asset allocation and diversification delivers in terms of their specific needs for future investment returns and risk management.”

» @RISK
» Insightful Investing

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