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In This Issue
What’s New
» @RISK 5.0 Network Version
   Now Available

» Palisade User Conference
   Europe to Feature
   DecisionTools Suite 5.0

» @RISK 5.0 World Tour
» Free Live Webcasts
» @RISK 5.0 Featured at
   Six Sigma Conferences

Case Study
» @RISK Helps Lower
   Colorado River Authority
   Manage Water Supply

@RISK Modeling Tips
» Asset Price Random Walks
   and Options Valuation

» Insurance Claims with the
   RiskCompound Function

What's New in @RISK 5.0
» Function Swap

@RISK Function
of the Month

» The RiskCompound Function

Palisade Analytics
in the Press

» Aerospace
» Agriculture
» Air Travel
» Animal Behavior
» Customer Support
» Greenhouse Gases
» Investing
» Job Classification
» Mobile Computing
» Oil and Gas
» Sports

» Palisade User Forums

2008 Palisade User Conferences
» Europe
21-23 April 2008
London, UK
» North America
2008 dates TBA
» Asia-Pacific
2008 dates TBA
» Latinoamérica
2008 dates TBA

Live chat Click
to chat live
with a sales


Free Webcasts
Nonlinear Feedback Loops using @RISK: Adding Uncertainty to a Dynamic Model of Oil Prices
Presented by Bill Strauss, FutureMetrics, LLC
» 29 Feb 2008, 2-3:30pm EST

@RISK 5.0 and Six Sigma
» 4 Mar 2008, 2-3:30pm EST

Regional Seminars
» North America
New Orleans: 26-27 Feb
Palm Springs: 26-27 Feb
Palm Springs: 28-29 Feb
Miami, FL: 11-12 Mar
Stamford, CT: 18-19 Mar
Washington, DC: 9-10 Apr
Vancouver, CA: 22-23 Apr
Houston, TX: 7-8 May
Ithaca, NY: 21-22 May
Denver: 29-30 May
Chicago: 3-4 June
Huntsville, AL: 17-18 June

» Latinoamérica
Santiago, Chile
  (en español):
  del 26 al 28 de febrero
Buenos Aires
  (en español):
  del 18 al 20 de marzo
Bogota, Colombia
  (en español):
  del 8 al 10 de abril

» Europe
Munich: 6-7 Mar
London: 12-13 Mar
Copenhagen: 26-27 Mar
London: 1-2 Apr
Paris: 7-8 Apr
Brussels: 8-9 May
London: 13-14 May
Prague: 9-10 June
London: 16-17 June
London: 14-15 July

» Asia-Pacific
Brisbane: 6-7 Mar
Auckland, NZ: 27-28 Mar
Perth: 10-11 Perth

Live Web Training
» Risk and Decision Assessment Training using @RISK, Part I
3-4 March, 1-5pm ET
14-15 April, 1-5pm ET
12-13 May, 1-5pm ET
9-10 June, 1-5pm ET

» Risk and Decision Assessment Training using @RISK, Part II
6-7 March, 1-5pm ET
17-18 April, 1-5pm ET
15-16 May, 1-5pm ET
12-13 June, 1-5pm ET

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

The DecisionTools Suite
The complete risk and decision analysis toolkit

The world's most widely used risk analysis tool
» @RISK for Excel
» @RISK for Project

Visual decision analysis for spreadsheets

Sophisticated neural networks for spreadsheets

Advanced statistical analysis for spreadsheets

The Innovative Optimizer
for Windows

The DecisionTools Suite

@RISK 5.0 Network Version Now Available
@RISK 5.0Enhances Corporate Collaboration
and Workgroup Deployment

The new @RISK 5.0 network version is now shipping! @RISK 5.0 network version uses industry-leading FLEXnet technology from Macrovision for easy deployment on network servers for workgroups and corporate licenses. Install @RISK on as many client machines as you want. The only restriction is on the number of users who can access @RISK at the same time. This makes it much easier for users to log in, run an analysis, and log off when finished. @RISK network licenses are the most cost-effective way to serve groups of multiple users. If you have more than two or three people using @RISK, you should consider a network license.

  • Install @RISK on as many client machines as you wish.
  • Easy to deploy with minimal IT hassles using industry-standard FLEXnet technology.
  • Software activation is only required on the server—not on each client.
  • Borrow or “check out” licenses for off-network use when away from the office.
  • Expand your network easily as your needs grow—no need to reinstall.
  • Cost-effective for multiple users.

Contact us today for a price quote.

North America
800 432 RISK or +1 607 277 8000

Europe, Middle East, Africa
+44 1895 425050

+61 2 9929 9799

» More about @RISK 5.0

Palisade User Conference Europe
to Feature DecisionTools Suite 5.0
London, April 22-23, 2008
Preview the all-new DecisionTools Suite 5.0 with new versions of PrecisionTree for decision trees, TopRank for what-if analysis, and more. Experience how @RISK and companion software works together like never before. Hear case studies on operational risk, brand risk, real options, insurance, forecasting, neural networks, and other topics. Network with other users in your industry.

» See the conference schedule
» Register today

@RISK 5.0 World Tour
Free Live Demos and Discussion
Hundreds of professionals in all industries have been learning about @RISK 5.0 via free live demonstrations and Q&A sessions in cities around the world. Mark your calendars for upcoming @RISK 5.0 World Tour demo stops. Registration is encouraged but walk-ins are always welcome!

22 February 2008
San Diego – Sheraton Suites
22 February 2008
Montreal – Le Centre Sheraton
26 February 2008
Amsterdam – Amsterdam Marriott Hotel
4 March 2008
Copenhagen – Palace Hotel
4 March 2008
Sydney – Palisade Offices
5 March 2008
Oslo – Radisson SAS Scandinavia Hotel
6 March 2008
Auckland, NZ
7 March 2008
Wellington, NZ
10 March 2008
Dallas – Westin City Center
12 March 2008
Houston – Westin Galleria Houston
13 March 2008
Austin, TX – Hilton Austin
13 March 2008
Perth, Australia
14 March 2008
San Antonio, TX – Westin River Walk
17 March 2008
Madrid – Westin Palace
4 April 2008
Adelaide, Australia

» Register today for free

Free Live Webcasts
Register to see these free Webex presentations demonstrating the use of @RISK for modeling oil prices and for Six Sigma applications.

Nonlinear Feedback Loops using @RISK: Adding Uncertainty to a Dynamic Model of Oil Prices
Presented by Bill Strauss, FutureMetrics, LLC
29 February 2008, 2-3:30pm EST

@RISK 5.0 and Six Sigma
4 March 2008, 2-3:30pm EST

» Learn more about webcasts and register

@RISK 5.0 Featured
at Six Sigma Conferences
The new @RISK 5.0 lets you define Six Sigma specification limits in order to calculate a range of process capability metrics for your DFSS, DOE, DMAIC and Lean problems using Monte Carlo simulation. @RISK 5.0 was featured at two industry-leading conferences: the Lean Six Sigma and Process Improvement Summit, where Jack Welch was the keynote speaker, on January 28-31 in Orlando; and the ASQ Lean Six Sigma Conference on February 11-12 in Phoenix. At these events @RISK was introduced and demonstrated with enthusiastic response to dozens of delegates from industries such as defense, automobile manufacturing, and IT outsourcing.

Case Study
@RISK Helps Lower Colorado River
Authority Manage Water Supply

The Lower Colorado River Authority (LCRA) manages water supplies for municipalities, farms and industries along a 600-mile stretch of the hot, arid region surrounding the Texas Colorado River which includes the state capital Austin. In a unique partnership, Cornell University Operations Research students collaborated with the LRCA to develop a water supply model using Palisade’s @RISK software.

» Read the full case study


Product Spotlight

Asset Price Random Walks and Options Valuation
Models of the prices of assets (stocks, property, commodities) very often assume a random walk over time, in which the periodic price changes are random, and in the simplest models are independent of each other. The future price level of the asset may result in some contract or payoff becoming valuable, such as in the case of financial market options. In these cases, the value of the contract (contingent payment or option) is calculated as the average discounted value of the future payoff. In the special case of European options on a traded underlying asset, the value calculated from the simulation may be compared with mathematical formulas that analytically provide the valuation, such as the Black-Scholes equation. In many more complex cases, the pertinent analytic formulas may be unknown or very complex to derive, and one may wish to rely on simulation techniques. This particular model compares the average simulated payoff for European Call and Put options with the Black-Scholes valuation.

» Download the example: AssetPrices.Options.BS.Multi.xls

Insurance Claims with the
RiskCompound Function
@RISK’s RiskCompound function uses two distributions to create a single new input distribution, streamlining insurance models that must account for frequency and severity of claims. This example illustrates claims modeling using RiskCompound.

» Download the example: RiskCompound.xls


Distribution of the Month

The RiskCompound Function

The RiskCompound function is used to combine frequency and severity distributions into a single function, saving thousands of rows of data in your models and running them much faster.

RiskCompound(dist#1 or value or cellref,dist#2 or cellref,deductible,limit) returns the sum of a number of samples from dist#2 where the number of samples drawn from dist#2 is given by the value sampled from dist#1 or value. Typically, dist#1 is the frequency distribution and dist#2 is the severity distribution. Optionally, deductible is subtracted from each dist#2 sample and if (dist#2 sample-deductible) exceeds limit, dist#2 sample is set equal to limit.

RiskCompound is evaluated with each iteration of a simulation. The first argument’s value is calculated using a sample drawn from dist#1 or a value taken from cellref (which can contain a formula). Then, a number of samples, equaling the first argument’s value, are drawn from dist#2 and summed. This sum is the return value for the RiskCompound function.
For example, the function:


would be used in the insurance industry where the frequency or number of claims is described by RiskPoisson(5) and the severity of each claim is given by RiskLognorm(100000,10000). Here the sample value returned by RiskCompound is the total claim amount for the iteration, as given by a number of claims sampled from RiskPoisson(5), each with an amount sampled from RiskLognorm(100000,10000). Two optional arguments, Deductible and Limit, allow you to subtract a deductible from each severity sample or cap a severity sample at an upper limit.

This example illustrates claims modeling using RiskCompound.

» Download the example: RiskCompound.xls

Palisade Software Techniques in the News

ASRC Aerospace Contributes to NASA’s Constellation System
Technique: Monte Carlo simulation   » see @RISK
Source: Reuters, January 8, 2008

An Alaska Native Corporation is using a Monte Carlo simulation program in development tests of the Ares 1/Orion Ground Operations (GO)Vehicle for space exploration.

Risk Analysis Buffers Farmers from Variability in Productivity
Technique: Monte Carlo simulation   » see @RISK
Source: Agronomy Journal, January 11, 20008

Monte Carlo simulation modeled the differences between yields for each planting month and harvest month combination in this study.

Planting by the Numbers
Technique: Neural networks   » see NeuralTools
Source: Daily News & Analysis - Mumbai,India, January 24, 2008

A neural network optimizes data from a system of sensors that registers soil temperature, humidity, and other planting conditions to pinpoint key planting times.

Air Travel
The Best Way to Board a Plane
Technique: Monte Carlo simulation   » see @RISK
Source:, February 14, 2008

In a leisure-time project, a physicist used a combination of a Monte Carlo optimization algorithm and intuition to design a boarding method 4 to 10 times faster than the ones in use.

Animal Behavior
What a Dog's Bark Means
Technique: Neural networks   » see NeuralTools
Source: U Weekly, January 3, 2008

A Swiss research team used neural network analysis to classify various kinds of dog vocalizations according to the dogs’ behavior.

Customer Support
Dell Set to Improve Enterprise Support
Technique: Decision trees   » see PrecisionTree
Source: Infoworld – Netherlands, February 12, 2008

Dell Computer is using decision tree technology to improve delivery of technical support to its enterprise customers.

Greenhouse Gases
European Union Countries Clash Over Emission Share-Outs
Technique: Monte Carlo simulation   » see @RISK
Source: FinFacts Ireland – Ireland, January 16, 2008

A decision tree guides European governments through the key choices surrounding greenhouse gas emissions.

Canadian Retirement Plans and Embedded Compensation
Technique: Monte Carlo simulation   » see @RISK
Source: National Post – Toronto, January 30, 2008

A finance author relies on Monte Carlo simulation to reveal impact on retirement plans of a widely used brokerage fee system.

Job Classification
Evaluation System Allows Easy Classification of Positions
Technique: Decision trees   » see PrecisionTree
Source: Centre Daily Times, Centre, PA, January 31, 2008

A new job classification system for multinational organizations uses decision tree technology to improve consistency of evaluation while responding to increasing corporate decentralization.

Mobile Computing
Software Supplier Brings Mobile Content Search and Selection to TV
Technique: Monte Carlo simulation   » see @RISK
Source: ScreenPlays magazine (online), January 28, 2008

A new Web search technology for mobile phones uses neural networks to classify content for routing to TV.

Oil and Gas
Tekoil & Gas Corporation Announcing Spudding of Its First Exploration Well in Western Newfoundland
Technique: Monte Carlo simulation   » see @RISK
Source:, January 22, 2008

Exploration company used Monte Carlo simulation to help verify offshore oil drilling site.

Business Prof Uses Odds on Playoffs for Motivation
Technique: Decision trees   » see PrecisionTree
Source: Calgary Herald, January 28, 20088

A University of Alberta business professor and avid hockey fan showed students how to use Monte Carlo simulation by calculating odds on hockey playoffs

Palisade User Forums

The Palisade User Forums are online discussion boards where users are invited to post questions and share ideas on their use of @RISK and other Palisade software. It’s also a great place to check for announcements regarding updates of Palisade software. Forums are organized by products.

» Join or view the Palisade Forums

Recent topics include:

» Filtering simulation results
» Cascading @RISK correlations
» Creating simulation report templates

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