In This Issue
What’s New

» @RISK Used to Simulate
   Consequences of Subprime
   Mortgage Crisis

» Risk & Decision Analysis
   Conference Draws Record

» Upcoming Webcasts
» VAIR Financial Modeling
   Courses Featuring @RISK

Case Study
» @RISK Analyzes Prison
   Cash Flows

@RISK Modeling Tips
» Financial Statement

What's New in @RISK 5.0
» The RiskCompound Function

@RISK Function
of the Month

» The TriGen Distribution

Palisade Analytics
in the Press

» Conservation
» Energy Use
» Investing
» Manufacturing
» Software Development
» Space Exploration

» Palisade User Forums

In This Issue
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DecisionTools Suite 5.0 World Tour
Special live demonstrations of the all-new DecisionTools Suite 5.0. Learn how the Suite products combine to deliver more complete results than any single product can provide.

Indianapolis, 20 November 08
Cincinnati, 21 November 08
Atlanta, 15 December 08

» Sign up for a Tour date

Regional Seminars
» Europe
London: 4-5 Dec 08
Munich: 9-10 Dec 08
London: 27-28 Jan 09
London: 29 Jan 09
London 27-29 Jan 09
London: 24-25 Feb 09
London: 26 Feb 09
London: 24-26 Feb 09
London: 31 Mar-1 Apr 09
London: 2 Apr 09
London: 31 Mar-2 Apr 09

» Latinoamérica
   (en español)
Bogotá, Colombia:
   24-26 de noviembre de 2008

» North America
Dallas: 3-4 Dec 08
Atlanta: 16-17 Dec 08
San Diego: 20-21 Jan 09
Bermuda: 4-5 Feb 09
Houston: 10-12 Feb 09
Morgantown, WV: 24-25 Feb
Phoenix: 10-11 Mar 09
Ithaca: 17-18 Mar 09
Ottawa: 24-26 Mar 09
Washington DC: 7-8 Apr 09
Chicago: 21-23 Apr 09
Calgary: 5-6 May 09
New York: 29-21 May 09
Toronto: 2-3 June 09
San Francisco: 16-18 June 09
Ithaca: 24-25 June 09

Live Web Training
» Risk and Decision Assessment Training using @RISK 5.0
Part I

8-9 Dec 08, 9am-1pm ET
12-13 Jan 09, 1-5pm ET
2-3 March 09, 1-5pm ET
13-14 April 09, 1-5pm ET
11-12 May 09, 1-5pm ET
8-9 June 09, 1-5pm ET

Part II
11-12 Dec 08, 9am-1pm ET
15-16 Jan 09, 1-5pm ET
5-6 March 09, 1-5pm ET
16-17 April 09, 1-5pm ET
14-15 May 09, 1-5pm ET

» Quantitative Project Risk Analysis using @RISK for Project: One Day Course (8023/AACEI One)
11 February 09, 1-5pm ET

Trial Versions
Palisade software is available in fully functional 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» @RISK for Excel
@RISK» @RISK for Project
@RISK» @RISK for Six Sigma

Visual decision analysis for spreadsheets

Sophisticated neural networks for spreadsheets

Advanced statistical analysis for spreadsheets

The Innovative Optimizer
for Windows

The DecisionTools Suite

@RISK Used to Simulate Consequences of Subprime Mortgage Crisis - e-focus

What's New
@RISK Used to Simulate Consequences of
Subprime Mortgage Crisis
Presented at the Palisade Risk & Decision Analysis Conference
by Roy Nersesian, Monmouth University

Roy Nersesian examines how the selling of mortgages as investments (collateralized mortgage obligations, or CMOs,) coupled with lax governmental regulation and the greed of house flippers fueled the flames of the home buying and building frenzy. An @RISK simulation shows exactly how and where investors lost in the ensuing housing market meltdown.

» Download the presentation

Risk & Decision Analysis Conference
Draws Record Crowd

The Palisade Risk & Decision Analysis Conference - North America was held in New York City on November 13 - 14 and drew over 150 practitioners and decision-makers from a broad spectrum of industries. Presentations and discussions touched on topics such as the subprime mortgage crisis, modeling flu pandemics, project risk management, and energy demand planning. The keynote was delivered by Harvard School of Public Health’s Dr. Kimberly Thompson, who discussed critical issues in the current Age of Risk Management, citing examples from public health and other areas.

The conference wraps up Palisade’s 2008 global conference series, which included events in London and Medellín, Colombia.

Here’s what attendees had to say:

“I found the conference quite informative and filled with useful information that I can incorporate into my classes immediately.” Robert Nydick, Villanova University

“Palisade is leading the way with tools and expertise to enable risk managers across all industries.” Robert Lake, Cisco Systems

» Read more about the conference

Upcoming Webcasts

“Process Mapping for Knowledge Transfer: Doing More with Less”
Presented in conjunction with ISSSP by George Pesansky,
VP Customer Services, SigmaFlow - November 20, 2 - 3pm ET

» Register now

“Lean Six Sigma Application of @RISK in Process Industries, Part II”
Presented by Ed Biernat, President
Consulting with Impact, Ltd. - December 12, 12 - 1pm ET
» Register now

VAIR Financial Modeling Courses Featuring @RISK

“Financial Statement Modeling and Analysis with Excel and @RISK 5.0”
December 8-9 in Toronto
» More information or Register

“Public-Private Partnership Modeling & Legal Analysis and @RISK 5.0” December 10-12 in Toronto
» More information or Register


Case Study
@RISK Analyzes Prison Cash Flows
Like businesses, public institutions need to protect their bottom lines. In England, Her Majesty’s Prison Service began working with the project and cost consultant Faithful & Gould to study strategic management, building, and renovation in the Prison Service’s operations. Using @RISK, the firm simulated cost and schedule scenarios for each of the capital works project on the Prison Service’s agenda. The firm’s cash flow simulations proved close enough to reality to assure the Prison Service of the validity of its capital works program and to allow the service to make contingency plans to offset significant risks.

» Read the full case study

Product Spotlight
Financial Statement Forecasting
Financial statement models are built for general forecasting purposes, including financing needs and credit analysis. In this example, a company has a fairly healthy forecasted cash flow for 2009, but also aims to reduce its long-term debt in 2009 to $70,000 from $97,000 in 2008. The company is forecasting that in the base case its financial position will be sufficient to do this. However, it wishes to analyze the probability that a short-term financing facility will be needed.

Download example model: FinStatementsRISK.xls

Product Spotlight
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?” To help answer this question, this series highlights key new features in @RISK 5.0. You can always see a complete list of new features, including short 30-second movies, here:

» What's New in @RISK 5.0

The RiskCompound Function
The RiskCompound function combines a frequency and severity distribution in a single function, speeding the modeling of problems in insurance and finance.

Watch how RiskCompound works

Function of the Month
The TriGen Distribution

Use of the RiskTrigen function avoids the problem of the minimum and maximum values not actually being possible occurrences in the standard triangular distribution (RiskTriang function). This is because in the RiskTriang function these are the points where the distribution intersects the X-axis, or points of zero probability.

RiskTrigen(bottom value,most likely value,top value, bottom perc., top perc.) specifies a triangular distribution with three points — one at the most likely value and two at the specified bottom and top percentiles. The bottom percentile and top percentile are values between 0 and 100. Each percentile value gives the percentage of the total area under the triangle that falls to the left of the entered point.


RiskTrigen(100,200,300,10,90) specifies a triangular distribution with a 10th percentile value of 100, a most likely value of 200 and a 90th percentile value of 300.

RiskTrigen(A10/90,B10,500,30,70) specifies a triangular distribution with a 30th percentile value equaling the value in cell A10 divided by 90, a most likely value taken from cell B10 and a 70th percentile value of 500.

Palisade Software Techniques in the News
Analytic Tools Boost WWF Fundraising
Technique: Neural Networks   » see NeuralTools 5.0
Source: Computing (London), November 5, 2008

The World Wildlife Fund plans to use neural networks to make better use of donor data.

Energy Use
Smart Metering: Enabling Greater Energy Efficiency
Technique: Decision trees   » see PrecisionTree 5.0
Source: TMCnet, October 22, 2008

Utilities can implement a rules-based decision tree to help electricity customers keep a lid on power use.

Avoiding Another Lost Decade
Technique: Monte Carlo simulation   » see @RISK 5.0
Source: Charlottesville Daily Progress, November 19, 2008

A financial advisor recommends balanced portfolios created with Monte Carlo simulation to avoid periods of low or no returns on investment.

Shutdown Risk Management
Technique: Monte Carlo simulation   » see @RISK 5.0
Source: Reliable Plant Magazine, November 2008

A new book calls attention to the role of Monte Carlo simulation, among other analytical techniques to manage the risks entailed in a plant shutdown.

Software Development
Future of Software Testing
Technique: Decision trees   » see PrecisionTree 5.0
Source:, November 7, 2008

The early stages of software testing can be improved by implementing automatically generated test scripts that use decision trees.

Space Exploration
NASA's Plans for Spaceflight Analyzed
Technique: Monte Carlo simulation   » see @RISK 5.0
Source: Space Ref, November 3, 2008

The Congressional Budget Office used Monte Carlo simulation to project the costs and risks involved in the completion of NASA’s launch plans.


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:

» Adding a linear relationship between input variables as an argument to an @RISK function



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