Customers & Industries: Columbia University

@RISK Helps Columbia University Students Tackle Global Risks

  • Industry: Academic, Government
  • Product(s): @RISK
  • Application: Energy and Public Policy

Summary

Columbia University students in Professor Roy Nersesian’s Quantitative Methods in Energy and Policy Analysis course gain hands-on experience in the development and interpretation of quantitative models for project evaluation and policy assessment. The students develop cash flow and market models using Palisade’s @RISK.

I don’t see how a manager can be effective without considering the risks inherent in any business decision. In other words, I don’t know how they live without @RISK.
Professor Roy Nersesian, Columbia University’s School of International & Public Affairs

Students at Columbia University’s School of International & Public Affairs (SIPA) learn to deal with risk on a global level. The class of 2005 came from over 100 countries, and the School’s 11,000 alumni are working in 155 countries around the globe. Many alumni are faced with risk on a local level, a transnational level, and a global level.

Columbia Center for Energy, Marine Transport and Public Policy

SIPA students who are interested in international energy management and related public policy issues can obtain a concentration from Columbia’s Center for Energy, Marine Transportation and Public Policy (CEMTPP). The Center was established at SIPA to provide a focal point for the study of economic, environmental, political, technological and other factors that affect the global production, transportation and consumption of energy. CEMTPP builds upon SIPA's strengths in international economics, public policy and quantitative techniques for analyzing policy and management.

Hands-on Risk Analysis Experience

Students in Professor Roy Nersesian’s Quantitative Methods in Energy and Policy Analysis course gain hands-on experience in the development and interpretation of quantitative models for project evaluation and policy assessment. The students develop cash flow and market models using Palisade’s @RISK.

The Power of Risk Analysis

According to Professor Nersesian, “We start by building a static model, and not surprisingly, the results look great. Then we add risk into the model using @RISK for a proper risk analysis, and the picture changes. The students quickly learn that there are possible negative outcomes.”

The case for risk analysis and risk management is pretty compelling. One example used in the course is a financial analysis of an oil production project in a developing nation. A static model suggests that the project is a slam dunk. However when uncertain factors such as future oil prices and interest rates are added using @RISK, the model becomes much more interesting. The students learn how the impact of variables such as the global price of oil and lending rates can turn a sure thing into a fiasco. The lesson is to identify risks, understand their impact through modeling, and then implement appropriate changes to the structure of the financing to mitigate risk.

Risk Analysis and @RISK are Essential

How important is risk analysis and @RISK to the quantitative analysis course? “With @RISK they quickly turn static models into dynamic, probabilistic models that show all the possible outcomes.” Nersesian adds, “Students find @RISK easy to use – it takes very little time to become proficient. When the students complete the course, they understand risk, they understand how @RISK can be used to analyze risk, and once they understand the scope of risk, they have the tools to come up with a plan to mitigate risk.”

Roy Nersesian is the author of several books on finance and risk analysis available through Palisade. In conclusion he states “I don’t see how a manager can be effective without considering the risks inherent in any business decision. In other words, I don’t know how they live without @RISK.”

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