@RISK Modeling Tips
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Project Risk Assessment
@RISK and DecisionTools Suite 6.1
@RISK and DecisionTools Suite
DNV use of @RISK for Solar Energy Project featured in Risk and Insurance Magazine
These solar panel companies typically have lengthy warranties for their products, leaving insurers, investors, and customers unsure of who will honor the warranty if a manufacturer shuts down. On top of this problem, solar panels present significant unknowns in terms of corrosion, design, and other factors.
Det Norske Veritas is a global consultancy that evaluates the technical viability of solar and other renewable energy projects. In its evaluations, DNV relies heavily on @RISK to manage the many unknowns. "That level of risk analysis, including Monte Carlo simulation, is extremely important for solar projects," said Davion Hill, principal engineer with DNV.
Palisade Launches Column
At Palisade, Rafael assists in the development and strategy of quantitative risk analysis methods geared towards the energy industry. He also served as a Financial Engineer in Risk Management at Brazilian-based energy giant Petrobras, where he created risk models for complex investment projects and assessed project risks for medium and large projects. Such projects included analysis of Brazilian Pre-Salt giant fields, projects in the Gulf of Mexico, and offshore infrastructure projects.
In the first two columns, Rafael discusses both the practical challenges oil companies can face when applying risk analysis, as well as how risk analysis can greatly benefit decision making in oil industry projects.
» Read the first column:
» Read the second column:
Upcoming Palisade Risk Conferences
Upcoming Palisade Risk Conferences include:
To prove the point, he explored these deficiencies in his doctoral research at Curtin University of Technology (Australia), using Palisade solutions. Having utilized tools such as @RISK in an occupational setting, O’Connell was convinced that the technology offered more efficient and accurate means of teaching risk.
O’Connell’s research sought to highlight the importance of probing beyond standard textbook theory in the world of finance, which assumes that an asset’s return should follow a normal distribution. He found that relying on the assumption of normality—when the true distribution can be better represented by a non-normal distribution—leads to an increase in both the number of violations and the instances of what’s known as “clustering,” a situation which multiplies the level of potential losses sustained. Using Palisade software yielded more accurate results: “The benefits gained from using Palisade software were the ability to select probability distributions from a large universe,” O’Connell said, “This opened up greater statistical modeling possibilities that develop more realistic solutions.”
Demand levels are estimated with normal distributions, with subsequent months based on preceding months. Backlogs are created where demand exceeds supply, regular and overtime labor costs are considered, and holding costs are calculated. RISKOptimizer is used to minimize the total cost while meeting demand.
Introducción al análisis de riesgo y decisión con @RISK y DecisiónTools Suite (en español)
Introduction to Risk Analysis using
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