@RISK 5.0 a Hit at Palisade User Conference
Riding on the success of its inaugural User Conference series in 2006, Palisade Corporation doubled the number of presentations and tripled the attendance mark for its 2007 User Conference Europe. Held in at Trinity House in London on 23-24 April, the event attracted over 110 practitioners, academics, and consultants from across the UK and the continent.

Sam McLafferty, President and CEO of Palisade Corporation provided an overview of the upcoming @RISK 5.0, and several sessions provided hands-on training with this new release. The response was overwhelmingly positive. Soon to be released in beta, @RISK 5.0 and its companion products in the DecisionTools Suite will set new standards in the risk and decision science marketplace.

» Read more about the User Conference

User Conference Call for Presentations
The 2007 Palisade User Conference Series continues with events in Sydney, Australia 13-14 September, Miami Beach 25-26 October, and San Jose, Costa Rica 26-27 November. We are accepting applications to present at all three events. Send us your application of @RISK, the DecisionTools Suite, or other Palisade software. Selecting presenters will receive complimentary registration at the event. Please send abstracts to Andrew Sich: asich@palisade.com.

» More about the Palisade User Conference North America in Miami Beach

@RISK and Evolver used for Enterprise Resource Planning
With Enterprise Resource Planning a nearly universal but continually evolving business model, consultant Don Mettler fulfills a vital role for the large manufacturing companies that are his clients. He specializes in integrating software systems to help these companies make the most efficient use of their plant and material resources. From pharmaceuticals to aerospace, Palisade’s Evolver, @RISK, and the @RISK Developer's Kit have been essential to much of this work.

» Read the full case study

@RISK Corporate Network Versions — Save 15%
@RISK Corporate Licenses are designed to help departments and workgroups collaborate and communicate in the most efficient manner possible to meet your risk and decision analysis needs. Customizable @RISK Corporate Licenses are available using FLEXnet networking technology to ensure hassle-free deployment and license management – all without sacrificing the flexibility you need to react to ever-changing market demands and staff structures.

Order @RISK FLEXnet network licenses and take 15% off. PLUS: Get a free upgrade to version 5.0 when released.

Call 800 432 RISK
Email sales@palisade.com

» More about @RISK FLEXnet Corporate Licenses

Business and Investment @RISK Models
24 May 2007
10am – 11am ET

The aim of this presentation is to demonstrate @RISK to users with little or no experience with stochastic modeling, and to provide a good introduction to the basic features of the software. Additionally, the presentation will be useful for more expert users, should they want to consider using @RISK as a tool to model a number of practical business situations.

We will work on a number of models and case studies such as how to use @RISK to model the administration of an investment portfolio and how to design an @RISK model for the launch of a new business idea. We’ll design proforma cash-flow models, P&L, and balance statements.

» More information and register

Business Continuity

» The application of statistical tools to business continuity management
Technique: Monte Carlo simulation
Source: Continuity Central, April 24, 2007

The practical implementation of Monte Carlo simulation to business continuity has been greatly simplified by the emergence of Excel add-ins such as @RISK. It is used to calculate probabilities where there is no analytical formula and has been widely used in fields as diverse as:
   * Engineering design and quality management;
   * Valuation of projects and companies; and
   * Pricing of financial derivatives.

Applying the technique to calculate, for example, losses from business disruption is very straightforward.

Currency Risk

» Hedging foreign currency risks
Technique: Decision trees
Source: Business Standard, May 3, 2007

Until recently, Indian exporters profited from the gradual depreciation of the rupee against the dollar, euro, or yen. With currency inflows and a fluctuating rupee, there is a need to consider hedging foreign currency receivables/payables. Systematic assessment requires thinking through the following “decision tree” process: To hedge or not? If no, the receivable is converted at maturity to rupees at the prevailing spot rate. If yes, then…

Disaster Response

» After small-scale anthrax attack: vaccinate, treat
Technique: Monte Carlo simulation
Source: Reuters, April 10, 2007

Researchers used Monte Carlo simulation over a 10-year time frame from a societal perspective to assess the most cost-effective response to an anthrax attack through US mail distribution centers in a large metropolitan area.

Financial Planning

» Plan gets money out of land: Former teacher looks to sell real estate holdings to diversify nest egg for retirement
Technique: Monte Carlo simulation
Source: Chicago Tribune, May 6, 2007

Contemplating selling vs. retaining real estate property while planning for retirement, former teacher Susie Hurst runs her assets through a Monte Carlo analysis which shows a 95 percent chance of making it to age 90 (her life expectancy) with at least $100,000 left in her estate, according to the planners.

» Your Economic Dashboard: Personal Financial Ratios
Technique: Monte Carlo simulation
Source: Dental Economics, April 13, 2007

Financial ratios are a rough guide for retirement savings. Planners use much more specific analysis, in particular, Monte Carlo simulation, to assess progress. Monte Carlo simulation is able to estimate the likelihood of achieving your goals by accounting for variability in the factors that contribute to your financial plan’s ultimate success by running hundreds or even thousands of “trials” on your financial plan.

» The Wisdom Of Brackets: Breaking complex questions into binary steps can lead to smarter calls
Technique: Decision trees
Source: BusinessWeek, March 26, 2007

“The smartest executives and the most successful investors have a unique ability to process an enormous amount of information and boil it down into binaries—'yes or no' is a binary—that simplify decision-making," says Clark Winter, global chief strategist for Citigroup Global Wealth Management.

Government Budgeting

» Pension, health insurance again on city agenda
Technique: Decision trees
Source: The Battle Creek Enquirer, April 8, 2007

Battle Creek, MI faces an estimated $70 million cost to cover the current health insurance premiums for retired firefighters and police officers. Generating the money could require service cuts or a tax increase for Battle Creek households. City commissioners may work toward their decision using a decision tree that works through each choice. They can vote yes or no, and depending on the majority opinion, go to the next choice until a plan is settled upon.

Insurance Fraud

» Don't Scrimp on System To Run Workers' Comp
Technique: Neural networks
Source: Insurance Networking News, May 1, 2007

Between 5% and 20% of the workers' comp claims insurers pay are fraudulent, bilking the industry out of something like $5 billion annually. A recent industry report recommends implementing neural networks in worker’s comp fraud prevention systems to identify potential fraud.

Manufacturing

» Design flows become increasingly complex for SiGe BiCMOS
Technique: Monte Carlo simulation
Source: EETimes, May 7, 2007

Silicon germanium (SiGe) BiCMOS technologies are used in a range of wireless and wired applications, such as cellular phones, wireless LANs, Bluetooth, and global positioning systems. Silicon foundries utilize Monte Carlo simulation to account for the effects for process variations.

» PAT Solution: Eight Advanced Process Control Technologies Worth Considering
Technique: Neural networks
Source: Pharmaceutical Processing, April 9, 2007

The U.S. Food and Drug Administration (FDA) Process Analytical Technologies (PAT) initiative allows pharmaceutical manufacturers to optimize the way they use their plant assets to produce specific drugs, ultimately permitting them to reduce the price that the consumer pays for their products. Neural Networks can be amazing for determining quantitative relationships between plant operating variables. The resulting statistical models can be used predict "product quality" from real time data.

Medical Diagnosis

» Cost Benefit Study Supports the Use of Longport's Technology in Pressure Ulcer Prevention
Technique: Monte Carlo simulation
Source: American Digital Networks, April 30, 2007

Longport, Inc., a medical technology specialist in high-frequency high resolution ultrasound imaging, today announced interim results from a cost benefit study supporting the use of its EPISCAN I-200 system as an ulcer prevention tool. Analysis using Monte Carlo simulation showed the use of the EPISCAN Ultrasound diagnosis to be the preferred option 73.7% of the time.

» Early Alzheimer diagnosis possible, claims study
Technique: Neural networks
Source: DailyIndia.com, April 14, 2007

A collaborative study by US researchers has shown that Alzheimer's can be detected and diagnosed with a high rate of accuracy in its early stages with the help of electroencephalogram (EEG) signals. The researchers monitored how the patients' brains reacted to a series of auditory stimuli by using automated neural network analysis.

Robotics

» Robot nose given keen smell sense
Technique: Neural networks
Source: BBC News, May 2, 2007

A layer of artificial mucus has been found to improve the ability of an "electronic nose" to precisely sniff out aromas in foods and perfumes. An artificial nose consists of a much smaller array of chemical sensors, typically between six and 12, connected to a computer or neural network capable of recognizing patterns of molecules.

Securities Fraud

» Two Pulitzer Prices for the Wall Street Journal
Technique: Monte Carlo simulation
Source: WebWire, April 16, 2007

The Wall Street Journal has been honored with two Pulitzer Prizes, including the Public Service Gold Medal for uncovering the improper backdating by companies of executive stock options. Journal reporter Charles Forelle used Monte Carlo simulation to identify which companies were most likely to have been backdating their options.

Space Exploration

» Shape-shifting 'smart dust' may explore alien worlds
Technique: Monte Carlo simulation
Source: New Scientist Space, April 18, 2007

Thousands of minuscule wireless sensors, or "smart dust", could one-day be used to explore other planets, swirling across the landscape by subtly altering their shape. Researcher John Barker employed Monte Carlo simulation to reproduce the erratic behavior of the Martian wind.

Video Surveillance/Anti-Terrorism

» The Unblinking Eye
Technique: Neural networks
Source: Electronic Design, April 27, 2007

Intelligent video analysis can locate potential terrorists and detect suspicious objects—all without a human operator. The Windows-based technology is based on sophisticated adaptive processing and neural networks. The software detects suspicious situations with an accuracy rate between 95% and 98%.

» Cost-Benefit Analysis of a Hospital Pharmacy Bar Code Solution
Application: Pharmacy dispensing accuracy
Source: Archives of Internal Medicine, Vol 167, No 8, April 23, 2007

Bar coding can reduce hospital pharmacy dispensing errors, but it is unclear if the benefits of this technology justify its costs. The purpose of this study was to determine the return on investment for implementing a pharmacy bar code system. Using Monte Carlo simulation, the net benefit during 5 years was $3.2 million.

» How L’Ecuyer Fine Tunes Number Randomization
Application: Mathematical randomization
Source: IRISA, Rennes, France, May 3, 2007

At IRISA research laboratory, in France, simulations are of great use for testing the behavior of network architectures and all kind of systems, when faced with rare events. A pivotal aspect of this work is the improvement of current random number generators, an activity that hinges upon pure mathematical basis and include the use of quasi-Monte Carlo methods.

Expert Answers to Technical Questions

Dear Amy,

How do I run multiple simulations to see how changes in model variables affect my simulation results?

— J.E.

Dear J.E.,

Example Model: SENSIM.XLS

As you know, @RISK sensitivity analysis lets you see the impact of uncertain model parameters on your results. But what if some of the uncertain model parameters are under your control? In this case the value a variable will take is not random, but can be set by you. For example, you might need to choose between some possible prices you could charge, different possible raw materials you could use or from a set of possible bids or bets. To properly analyze your model, you need to run a simulation at each possible value for the "user-controlled" variables and compare the results. A Sensitivity Simulation in @RISK allows you to quickly and easily do this - offering a powerful analysis technique for selecting between available alternatives.

In @RISK any number of simulations can be included in a single Sensitivity Simulation. The RiskSimtable function is used to enter lists of values, which will be used in the individual simulations, into your worksheet cells and formulas. @RISK will automatically process and display the results from each of the individual simulations together, allowing easy comparison.

» Click here to see how to run a Sensitivity Simulation

» Click here to download the example file SENSIM.XLS