Palisade Corporation
E-Focus: Scottsdale Insurance Company Utilizes @RISK to Choose between Competing Opportunities In This Issue
What’s New

» Scottsdale Insurance
   Company Utilizes @RISK
   to Choose between
   Competing Opportunities

» Palisade Europe is Expanding
   Seeking to Fill Two
   New Positions

» Save the Date:
   Palisade Risk Conference
   Las Vegas! Nov. 7-8

» Palisade Asia-Pacific Risk
   Conference Attracts
   Diverse Delegation

Case Study
» A Case to Reforecast
   Contingency Throughout
   the Implementation Stage
   of a Project

@RISK Modeling Tips
» Using Real Options to
   Value a Lease on
   a Gold Mine

Upcoming Webcasts

In This Issue
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2012 Palisade Risk Conferences
 
Industry experts present real-world case studies, Palisade consultants deliver workshops and training, plus sneak previews of new software. Don't miss the opportunity to sign up for an Expert Session, in which you can have an expert review your model and answer questions, one-on-one, at no charge.
 
» London: 18-19 April
» Sydney: 29-30 May
» Las Vegas: 7-8 Nov


Regional Seminars
» Asia-Pacific
Auckland: 18-19 July
Brisbane: 8-9 August
Singapore: 21-22 August

» Brazil
São Paulo: 17-19 de julho
Rio de Janeiro: 7-8 de agosto
Belo Horizonte: 19-21 de setembro

» EMEA & India
London: 31 July - 1 August
Bangalore: 27-28 August
Mumbai: 30-31 August

» Latin America
Medellín: 24-26 de julio
México, D.F.:
  30 de julio al 3 de agosto
San José: 27-31 de agosto
Bogotá: 4-6 de septiembre

» North America
Houston: 17-19 July
Boston: 17-19 July
San Francisco: 14-15 August
Calgary: 14-16 August
Charlotte: 21-22 August
Hartford: 4-5 September
Denver: 11-13 September
Montreal: 18-20 September
 

Live Web Training Decision-Making and Quantitative Risk Analysis
using @RISK
PART I

5-6 July, 1pm-5pm ET
PART II
26-27 July, 1pm-5pm ET

Project Risk Assessment
using @RISK

20 August, 9am-1pm ET

Decision-Making and Quantitative Risk Analysis
using the DecisionTools Suite
PART I

6-7 Sept., 9am-1pm ET
PART II
17-18 Sept., 9am-1pm ET

 

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Try @RISK or any of our
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Scottsdale Insurance Company Utilizes @RISK
to Choose between Competing Opportunities

The decision to insure or decline coverage must be considered prudently. Accurately assessing the risks that could affect losses is one of the key factors when making such a decision. To illustrate the significance of assessing risk, Scottsdale Insurance Company used Palisade’s @RISK to portray how the insurer would decide which commercial property which would have a higher return on capital to insure, when comparing two different commercial properties.

For this analysis, Scottsdale Insurance Company used @RISK to determine Risk Adjusted Returns on Capital (RAROC), a framework for analyzing risk-adjusted financial performance. Accurate assessment of RAROC enables organizations to get a consistent view of profitability across businesses. RAROC also provides a clear assessment of the return on investment forecast, after accounting for expenditures required to cover potential risk.

" I find the graphical outputs to be the most useful feature.
  Being able to compose a picture showing the range of
  outcomes is critical to analyzing our complex models and is
  extremely useful in presenting to senior executives, who do
  not have financial backgrounds."
                          – Allan Smith, financial business advisor
                             at Scottsdale Insurance

 

 » Read the full case study
 » More about Scottsdale Insurance Company
 

Palisade Europe is Expanding –
Seeking to Fill Two New Positions

Regional Sales Manager & Business
Development Manager
(Germany, Austria & Eastern Europe)

Palisade Corporation is expanding and has an opening for its German and Eastern European territory. This position will have responsibility for developing the market and closing sales for customers large and small in Germany, Austria, and Eastern Europe. Our clients span many industries, particularly: manufacturing, banking, insurance, construction/engineering, energy, and utilities. Just a few clients in the territory include Allianz Worldwide, Deutsche Bank, Deutsche Telekom, E.ON, RWE Group, Deutsche Post, and many others.

We are looking for someone who is a self-starter, can work with little direction, and isn’t afraid to get out and talk to people. In addition, the candidate needs the ability to grasp and demonstrate a technical/statistical product and be able to explain its value proposition in easy-to-understand terms. Thorough technical expertise is not required, but the ability to explain basic features and benefits is.

 » View the full description and apply

Academic Sales / Relationship Manager
Territory: EMEA + India

Palisade Corporation is expanding and has an opening to grow the academic market. This position will have responsibility for increasing the use of @RISK and DecisionTools Suite software by universities and colleges throughout Europe and India. Risk analysis is an important part of many MBA, engineering, and other curricula, and Palisade software forms a key component of many course syllabi and textbooks in the field. Just a few schools currently using our software in the territory include INSEAD, Cambridge Judge Business School, London Business School, Manchester Business School, and many others.

We are looking for someone who is a self-starter, can work with little direction, isn’t afraid to get out and talk to people, and ideally has some background in or familiarity with the academic market. In addition, the candidate needs the ability to grasp and demonstrate a technical/statistical product and be able to explain its value proposition in easy-to-understand terms. Thorough technical expertise is not required, but the ability to explain basic features and benefits is.

 » View the full description and apply


Save the Date:
Palisade Risk Conference Las Vegas!
November 7-8 at Mandalay Bay

Join us again this year in Las Vegas for the most important event of the year for quantitative risk and decision analysis! In its seventh year and attracting more people every time, the Palisade Risk Conference has become the “must attend” event for professionals dealing with risk in any industry. Over the course of two days, industry experts and Palisade consultants will present a selection of over 40 real-world case studies, software workshops, and training classes. Learn about innovative and interesting approaches to managing risk and uncertainty in a wide range of business applications. You can also get personalized one-on-one consulting on your risk models included with your conference registration. And of course networking events and lunches are always included.

New this year, we are moving to the exciting Mandalay Bay Resort and Casino. Book your room now at this 5-star resort for only $149.

 » Learn more! Full schedule coming soon.
 » Book your room


Palisade Asia-Pacific Risk Conference
Attracts Diverse Delegation

Attracting over 100 delegates, Palisade’s 2012 Risk Conference in Sydney, Australia offered something for everyone, regardless of industry sector. The event was held at the Hilton Sydney on 29-30 May. Professionals attended from industries such as mining, engineering and construction, oil and gas, finance and insurance, and more. There were dozens of presentations and training sessions divided into three tracks.

Over the course of the two days this was followed by sessions on managing risk in large project schedules, more effectively estimating costs, planning for insurance, ensuring environmental safety, financial valuation, and more. There were also a number of sessions on how to better think about risk in terms of organizational culture. Furthermore, Palisade staff delivered numerous software training sessions using the latest software techniques.

New this year, delegates took advantage of one-on-one Expert Sessions. Offered by Palisade consultants and technical experts, these hands-on, individualized consulting sessions helped many attendees improve their risk models.

The conference also featured a plenary address by Andrew Kight of Aon Global Risk Consulting on the topic of considering an organisation’s risk appetite in a quantitative way when planning insurance strategies.

"The Palisade conference was hugely enjoyable as well as educational, and well pitched - I like the mix between case studies and software demos such that both beginners and experts can learn something new. I will definitely be at the next one as well as recommend it to others."
                          –Robert Kinghorn, Principal Economist,
                            Parsons Brinckerhoff

 » Read more about the conference and download conference presentations
 » Read about more conferences this year in London and Las Vegas


Case Study
A Case to Reforecast Contingency throughout
the Implementation Stage of a Project

Presented by Greg Wruck of GNT Project Solutions, at the Palisade Asia-Pacific Risk Conference, Sydney, Australia, May 29, 2012.

There is a large amount of theory and practice in the project industry associated with the management of risk and contingency. Organizations such as the Association for the Advancement of Cost Engineering International (AACEi), the Project Management Institute (PMI) and countless other books, presentations and research papers have produced a seemingly endless stream of literature on this topic.

Much of the evolution of project processes has focused on using risk-based methods to calculate the amount of contingency required prior to commencing a project. Prior to project approval, stakeholders will often require sophisticated analysis of project costs using stochastical / Monte Carlo techniques. However once a project is approved, contingency is managed using empirical, or “rule of thumb” methods, and the focus moves to a single Forecast Final Cost and Completion Date.

This paper discusses some of the issues associated with this approach, and proposes a manageable method whereby the contingency model can be maintained and updated in line with changes to the risk profile throughout the Implementation Stage of a Project.

 » Read the presentation
 » More information about the Palisade Risk Conference Sydney


Product Spotlight
Using Real Options to Value a
Lease on a Gold Mine

Excepted from Chapter 57 of Financial Models using Simulation and Optimization, by Wayne Winston.

Many investment opportunities involve decisions that are made at different points in time. If the value of the investment opportunities depend on the price of a commodity (such as gold price) then the risk neutral approach we used to value stock options can be used to value real investment opportunities. This approach to valuing investment opportunities is known as the real option approach.

GoldCo is trying to value a 10‐year lease on a gold mine. Each year up to 10,000 ounces of gold can be extracted at a cost of $200 per ounce. The risk free rate is assumed to remain constant at 10%. The price received for all gold extracted during a year is assumed to equal the price of gold at the beginning of the year, but the all cash flows occur at the end of the year. The current price of gold is $400 and the future price of gold is uncertain. We model the future price of gold with a binomial tree. Each year we assume that gold will (with probability .75) increase by 20% and (with probability .25) decrease by 10%. The annual interest rate is 10%. What is the value of the lease?

 » Download the full description and example model
 » Learn more about Financial Models using Simulation and Optimization


Upcoming_Webcasts
Introduction to Risk & Decision Analysis
using @RISK & the DecisionTools Suite

Presented by Palisade Corporation
   July 3, 2012, 10am BST (British Summer Time)
» Register Now
   July 11, 2012, 11am EDT (Eastern Daylight Time)
» Register Now
   September 12, 2012, 11am EDT (Eastern Daylight Time)
» Register Now

Portfolio Management using @RISK
Presented by Matt Rosenberg, RoseCap Investment Advisors
   September 20, 2012 11am EDT (Eastern Daylight Time)
» Register Now

» See complete Webcast schedule


Palisade

The Global Leader in Risk and Decision Analysis
Palisade Corporation is the world’s leading provider of risk and decision analysis software and solutions. Founded in 1984, its products @RISK and the DecisionTools Suite are used by over 95% of the Fortune 100, in nearly every industry around the world. Palisade is headquartered in New York State, and has offices in London, Sydney, Rio de Janeiro, and Tokyo.

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