Helicopter Manufacturer AgustaWestland Uses @RISK to Inform Major Company Decisions

In This Issue
What’s New
» Helicopter Manufacturer
   Uses @RISK to Inform Major
   Company Decisions

» Palisade Regional Risk

» Palisade's World Cup Model
   Garners Press Coverage

Case Study
» Financial Firms Rely on
   Palisade Products to
   Minimize Risk for Clients

@RISK Modeling Tips
» Modeling Oil Prices

Upcoming Webcasts

In This Issue
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Helicopter Manufacturer AgustaWestland Uses @RISK to Inform Major Company Decisions
New helicopters require large investments in order to design, develop, test, certify and bring the product to market—a process that can last three to five years. The venture also carries considerable financial risk. Thus, Anglo-Italian helicopter manufacturer AgustaWestland relies on @RISK to determine the financial feasibility of developing any new product.

AgustaWestland first builds a ‘deterministic’ Excel model to predict key financial outputs such as revenue, net profit, Net Present Value (NPV), Internal Rate of Return (IRR) and financial break-even. Inputs to the model include: the cost of engineering studies for the design and development of the new product; prototype manufacture; flight tests; certification; etc. Financial parameters such as inflation and exchange rates in different currencies are also accounted for.

AgustaWestland then carries out an @RISK analysis using Monte Carlo simulation to determine the accuracy of the forecasts and the way to improve the business, both in true feasibility and in financial results. The models must take uncertainty into account because the economic situation cannot be predicted with any great accuracy, especially when the business cases are based on a period of 20 years. Using @RISK graphs, AgustaWestland can see which inputs have the greatest effect on the financial outputs, and therefore require attention.

“Our use of the risk analysis element of Palisade’s DecisionTools Suite has enhanced our ability to assess, control and drive company decisions. We can now focus on the key activities that enable us to pursue the best product within the most appropriate financial timeframe,” says Francesca Schiezzari, a Senior Analyst at AgustaWestland who uses @RISK to build similar financial business cases for a variety of company projects.

  » Read the full case study
  » More about @RISK

2014 Palisade Regional Risk Conferences
For nearly a decade, the Palisade Risk Conferences have been bringing together risk and decision analysis professionals from Fortune Global 500 corporations to small consulting practices, and across every industry. We have two more stops in the United States and in Australia and just recently added our London and Frankfurt dates.

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New Orleans: 19-20 November Register Now


Palisade's World Cup Model
Garners Press Coverage

The first stage of the 2014 World Cup is well under way, with plenty of surprise upsets and dramatic games already. Palisade has already taken part in the fun with a detailed simulation model that predicts the ultimate winner of the championship—Brazil, with its home-field advantage, has a 17% chance of taking home the Cup. The model, created by Palisade consultant and trainer Fernando Hernández, was based on four years of FIFA data from over 200 national teams, and computes 50,000 iterations to arrive at the final predictions.

This model grabbed the interest of both mainstream and industry publications; the Wall Street Journal featured the forecast in their article “The Journal’s Prediction”. It reads, “World Cup prediction algorithms are notoriously predictable. And they're often flat wrong…So for 2014 prediction, the Journal looked to Fernando Hernandez, a consultant and trainer at Palisade Corp…[who] created a brilliantly logical prediction model…”

The model was also featured in the Risk Management Monitor, the official blog of Risk Management magazine that provides daily articles, commentary, interviews, podcasts and videos related to the world of risk management and insurance. The piece, written by Palisade Vice President Randy Heffernan, notes how the model can be used to make more exact predictions on the world-famous tournament. “Many will be putting money on the various matches—basing their bets on national pride or gut feelings,” Heffernan writes. “There is another option, however. If you have the data and the inclination, you could also utilize a Monte Carlo simulation to place your wager.”

 » Learn more about the model
 » Read the Wall Street Journal article
 » Read the Risk Management Monitor article
 » Read the article featured in Analytics India Magazine

Case Study
Financial Firms Rely on Palisade Products
to Minimize Risk for Clients

Investing and risk management go hand-in-hand; all investors aim to maximize profits while minimizing risk, so it’s not surprising that Palisade’s software tools are heavily relied on in this field. Seth Berlin, Principal Strategist at Performance Thinking & Technologies, turned to @RISK and RISKOptimizer to help a hedge fund client optimize their portfolio, while Matthew Rosenberg, Managing Partner of RoseCap Investment Advisors used @RISK to help analyze risk levels of clients’ direct investment opportunities.

Berlin used Palisade software to find an optimal portfolio sweet spot that avoids exorbitant risk while yielding satisfactory returns. Berlin simulated changes in capital markets assumptions and adjusted a mix of hedges to identify an optimal portfolio. The software helped prove to his clients that quantitative measures of simulation could help identify an optimal portfolio, rather than the typical qualitative approach. “RISKOptimizer and @RISK shuffle the deck a million times, and let you see how all those different combinations could play out,” he says.

In Rosenberg’s case, he used @RISK to analyze commercial real estate investments. “There are a lot of variables that are highly uncertain,” he explains. These include rent rates, lease renewal probabilities, interest rate changes, etc. Because all these variables could combine in a myriad of ways, Rosenberg used @RISK to illustrate the range of outcomes to his client. “Our models use @RISK to ultimately give us a dispersion of values and a risk assessment of the property rather than one single number of what the investment is worth.”

 » Read "@RISK Optimizes Risk in Hedge Funds"
 » Performance Thinking & Technologies
 » Read "RoseCap Uses @RISK to Analyze Risk Levels
    of Direct Investment Opportunities"

 » RoseCap Investment Advisors

Product Spotlight
Modeling Oil Prices
From Chapter 13 of Energy Risk Modeling by Roy Nersesian,
published by Palisade

@RISK and the DecisionTools Suite have applications in a broad range of sectors, particularly in the oil and gas industry. Those who are interested in analyzing and modeling oil prices can learn a great deal from this section of Roy Nersesian's Energy Risk Modeling book. The excerpt gives a detailed primer on the history of oil pricing and production control—from the days of Rockefeller’s benevolent monopoly to Saddam Hussein’s rumored oil price manipulations--then takes the reader through step-by-step guides on how to best use Palisade software to analyze historical oil price data and model future prices. A must-read for anyone wanting a better understanding of this vital commodity and how best to anticipate its future fluctuations.

 » Download the example model and step-by-step instructions


Análise Quantitativa de Risco Utilizando
o @RISK e o DecisionTools Suite

Presentador: Renato Limão, Palisade
  01 July - 10am BRT Brasília Time (9am EDT, 3pm CEST)   » Registrar

Introduction to Risk and Decision Analysis
using @RISK and The DecisionTools Suite

Presented by: Palisade
   03 July - 12noon AEST Sydney Time (10pm EDT)   » Register Now
   17 July - 11am CEST (5am EDT)   » Register Now
   14 August - 11am CEST (5am EDT)   » Register Now

Business Forecasting and Simulation using
@RISK an the DecisionTools Suite

Presented by: Glen Justis, Experience on Demand
   Part 1 of 3: 10 July - 11am EDT (5pm CEST)   » Register Now
   Part 2 of 3: 14 August - 11am EDT (5pm CEST)   » Register Now
   Part 3 of 3: 18 September - 11am EDT (5pm CEST)   » Register Now

Optimisation with Evolver
Presented by: Rishi Prabhakar, Palisade
   Part 1 of 2: 14 July - 12noon Sydney Time   » Register Now
   Part 2 of 2: 19 August - 12noon Sydney Time   » Register Now

Handy Tips for Using @RISK
Presented by: Rishi Prabhakar, Palisade
  12 August - 12noon Sydney Time   » Register Now

» See complete Webcast schedule


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and Decision Analysis

Palisade 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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