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» CFO Magazine Notes Rise
   of Risk Management
» Palisade Blog Headlines
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Case Studies
» Demand-Side Management
  and BC Hydro’s Energy
  Planning Process

@RISK Modeling Tips
» Oil & Gas: Simple
   Volumetric Reserves

What's New in @RISK 5.0
» Step Through Simulations

@RISK Function
of the Month
» The Cumulative Distribution

Palisade Analytics
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» Accounts Receivable
» Neurobiology
» Software Innovation
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A one-day forum covering risk and decision analysis from all angles specific to the energy sector.

Houston 21 May 2009

» Register Now for the
   Energy Forum

» Europe
London: 10-11 Mar 09
London: 10-12 Mar 09
Zurich: 26-27 Mar 09
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   (en français) 
London: 28-29 April 09
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» Africa
Johannesburg: 18-19 Mar 09
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» Decision-Making and Quantitative Risk Analysis using @RISK
PART I
31 Mar-1 Apr, 11am-3pm ET
11-12 May 09, 9am-1pm ET
PART II
7-8 Apr, 11am-3pm ET
14-15 May 09, 9am-1pm ET

» Decision-Making and Quantitative Risk Analysis using the DecisionTools Suite
PART I
8-9 June, 11am-3pm ET
PART II
15-16 June, 11am-3pm ET

NEW
5-Part Web Training from our Asia-Pacific Office

» Part 1
Introduction to Simulation
and Modelling Uncertainty
24 February, 1-5pm AEDT
26 February, 1-5pm AEDT
17 March, 1-5pm AEDT
4 June, 1-5pm AEDT
23 June, 1-5pm AEDT

» Part 2
Analysing Simulation Output
19 March, 1-5pm AEDT
7 April, 1-5pm AEDT
25 June, 1-5pm AEDT

» Part 3
Selecting the Right Distribution
9 April, 1-5pm AEDT
28 April, 1-5pm AEDT

» Part 4
Advanced Modelling Techniques
30 April, 1-5pm AEDT
12 May, 1-5pm AEDT

» Part 5
Special @RISK Functions
14 May, 1-5pm AEDT
2 June, 1-5pm AEDT

Palisade software is available in fully functional trial versions. Try @RISK or any of our software today!


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» @RISK for Excel
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CFO Magazine Notes Rise of Risk Management
The January 2009 issue of CFO magazine cites a survey of 125 CFOs in which nearly 75 percent of respondents said risk management now outranks key issues such as debt financing, relationships with banks, pension-plan asset allocation, and equity financing.

Firms are responding by restructuring to include risk management departments, chief risk officers, and systematic risk solutions. According to the article, “nearly half the respondents expect to implement broad changes to their risk management policies and practices, from the shop floor to the boardroom.”

@RISK and DecisionTools Suite software perform Monte Carlo simulation and other key analytics for risk management. This software provides probabilistic insights into not just what could happen, but how likely it is to happen, and are key tools for implementing such systematic change. In many companies, financial or other projections must be accompanied by probabilistic assessments from an @RISK Monte Carlo simulation. Entire groups and divisions are being trained on not just how to use these tools, but how to think in uncertain terms instead of simple point estimates. It’s a way of thinking that is catching on.

» Learn more about @RISK
» Learn more about Monte Carlo simulation
» Learn more about DecisionTools Suite
» Read the CFO article "Rethinking Risk"

Palisade Blog Headlines
Uses of Correlation Modelling
Wednesday, February 11, 2009
In February, Palisade's Director of Training and Consulting Dr. Michael Rees put together a three-part series on Correlation Modelling. Dr. Rees addresses the uses of correlation modelling, the measurement and stability of correlation coefficients, some frequent misconceptions and consequences of correlations and some alternative modelling techniques within a risk analysis.
» Part 1: Uses of Correlation Modelling
» Part 2: Correlation and Directionality
» Part 3: Correlation and Co-integration

Weeds and Want
Friday, February 20, 2009
Colorado State University received a large grant to develop risk assessment and decision evaluation tools to optimize strategies for managing Drooping Brome (also known as cheatgrass). Researchers are taking an operations management approach to staving off this weed.
» Read more

Palisade Corporation Exhibiting at the
ASQ Lean Six Sigma Conference
Monday, February 23, 2009
During these deteriorating economic times, it is more important than ever for organizations to be more vigilant about cutting costs and boosting the bottom line. An option is to instill a Lean and Lean Six Sigma culture when tackling projects to save money. The American Society for Quality (ASQ) is once again hosting the 2009 Lean Six Sigma Conference, March 2–3, 2009, in Phoenix, Arizona, to teach professionals needed skills to take back to their organizations.
» Read more

Subscribe to the Palisade blogs.

Upcoming Webcasts
"Monte Carlo Simulation: An Underutilized Six Sigma Tool”
Presented by Rick Haynes, Smarter Solutions, Inc.
February 26, 2009, 1:00pm EST - This Thursday!
Lean six sigma projects are performed in many areas of business. There are a few that require an estimation of future performance when there is no chance to test or evaluate the new process. This live webcast documents a case where a reliability testing effort provided a reliability model that needed to be extrapolated in order to estimate the total impact on warrantee costs.

» Register now

"Predictive Analysis using The DecisionTools Suite”
Presented by Prakash Shrivastava,
Strategic Management International, Inc.
March 26, 2009, 1:00pm EST
In this webcast, we will explore the capabilities of Palisade's DecisionTools Suite in predictive analysis. Using an example from the Business Financial Services /Collections Industry, we will demonstrate: StatTools to show patterns of customer profiles who default on payments; @RISK to show the impact on profits of companies due to reduced ability to collect in deteriorating economy; NeuralTools to show how companies can use customer profiles to develop a predictive model – whether or not a customer will pay; PrecisionTree to determine whether a company should invest in new technology for automating customer contacts. Also, other useful products/elements of the Palisade DecisionTools Suite will be featured.

» Register now

"The Use of The DecisionTools Suite in Probabilistic Cost Estimating
for Environmental Asset Retirement Obligations”
Presented by John W. Lynch, P.E., President, JWL Environmental
April 2, 2009, 11:00am EST
This live webcast will demonstrate the DecisionTools Suite in financial risk quantification (RQ) for environmental remediation and site cleanup efforts. The session will consist of three segments: RQ Drivers, RQ Techniques and Resources, RQ Examples and Lessons Learned. Lynch will present three cases where RQ was applied to environmental cleanup projects and site portfolios. Time will be reserved for Q&A at the end.

» Register now

Demand-Side Management and
BC Hydro’s Energy Planning Process
Presented by Basil Stumborg at the
2008 Palisade Risk & Decision Analysis Conference
BC Hydro is the provincial electric utility for British Columbia. With two million customers and annual revenues of roughly $5 billion, it is Canada’s second biggest utility.

With its current Long Term Energy Plan in front of its regulator, BC Hydro has embarked on a bold shift in its energy strategy– it intends over the next 20 years to meet almost 75% of its incremental load through energy conservation – one of the most aggressive targets in North America.

The uncertainty analysis around the energy conservation goals has played a key role in the energy planning processes. @RISK’s Monte Carlo simulation is used to forecast highly uncertain demand and other variables.

Download the presentation

Oil & Gas:
Simple Volumetric Reserves
This model calculates simple volumetric reserves, N=AhR. The three input cells for A, h, and R contain Triang distributions. The single output cell, Reserves, is the product of the inputs, scaled down by 10^6. After simulation, the resulting distribution for N is skewed to the right.

Download the example: AHR1.xls

The release of @RISK 5.0 has spurred tremendous response from our users. Every day customers ask us, "What's new in @RISK 5.0?" Read about one of the new features below. Click here to see a complete list of new features, including short 30-second movies.

Step Through Simulations
You can step through iterations of a simulation you have run, updating Excel with the sampled values. This lets you see any particular scenario in your Excel model.

See how Step Through Simulations works

The Cumulative Distribution
RiskCumul(minimum,maximum,{X1,X2,..,Xn},{p1,p2,..,pn}) specifies a cumulative distribution with n points. The range of the cumulative curve is set by the minimum and maximum arguments. Each point on the cumulative curve has a value X and a probability p. Points on the cumulative curve are specified with increasing value and increasing probability. Any number of points may be specified for the curve.

Examples
RiskCumul(0,10,{1,5,9},{.1,.7,.9}) specifies a cumulative curve with 3 data points and a range of 0 to 10. The first point on the curve is 1 with a cumulative probability of .1 (10% of the distribution values are less than or equal to 1, 90% are greater). The second point on the curve is 5 with a cumulative probability .7 (70% of the distribution values are less than or equal to 5, 30% are greater). The third point on the curve is 9 with a cumulative probability of .9 (90% of the distribution values are less than or equal to 9, 10% are greater).
RiskCumul(100,200,A1:C1,A2:C2) specifies a cumulative distribution with 3 data points and a range of 100 to 200. Row 1 of the worksheet — A1 through C1 — holds the values of each data point while row 2 — A2 through C2 — holds the cumulative probability at each of the 3 points in the distribution. In Excel braces are not required when cell ranges are used as entries to the function.

Accounts Receivable
Collection Agencies Employ Virtual Spanish-Speaking Agents
Technique: Decision trees   » see PrecisionTree 5.0
Source: PR Web, January 28, 2009

To help eliminate language difficulties in communicating about payment of debt, a new automated contact system based on decision trees uses an animated character, called an Avatar, to converse with customers in their own language.

Neurobiology
Neural Modeling Helps Expose Epilepsy Triggers
Technique: Neural networks   » see NeuralTools 5.0
Source: PressReleasePoint, February 13, 2009

Research from the U.S. Department of Energy’s Argonne National Laboratories demonstrates how neural networks can be used to simulate activity in areas of the human brain where epileptic seizures arise.

Software Innovation
Handwriting Recognition Software Approaches
Technique: Neural networks   » see NeuralTools 5.0
Source: TechRadar UK, February 10, 2009

A tech editor passes along Microsoft’s announcement of progress using neural networks technology in the development of new handwriting recognition software.

Space Science
A Census of Alien Life
Technique: Monte Carlo simulation   » see @RISK 5.0
Source: Scientific American, February 10, 2009

A report on one scientist’s use of Monte Carlo simulation and other techniques to estimate the extent of extraterrestrial life.

Web Metrics
Think Ahead While Cutting Back
Technique: Monte Carlo simulation   » see @RISK 5.0
Source: MediaPost Publications, February 10, 2009

Columnist advises IT managers to look to such techniques as Monte Carlo simulation for sorting out cost-cutting strategies.

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