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Dave Bristol, Eastern Region Sales Manager 800-432-7475 x333, dbristol@palisade.com http://www.palisade.com

Palisade Corporation Risk modeling and analysis in Excel. Dave Bristol, Eastern Region Sales Manager 800-432-7475 x333, dbristol@palisade.com http://www.palisade.com. Agenda. Palisade Corporation Overview What is risk? Using Excel modeling to better understand how risk impacts our work.

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Dave Bristol, Eastern Region Sales Manager 800-432-7475 x333, dbristol@palisade.com http://www.palisade.com

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  1. Palisade Corporation Risk modeling and analysis in Excel Dave Bristol, Eastern Region Sales Manager 800-432-7475 x333, dbristol@palisade.com http://www.palisade.com

  2. Agenda Palisade Corporation Overview What is risk? Using Excel modeling to better understand how risk impacts our work

  3. Palisade Corporation Continuity and longevity:Palisade Corporation is now in its 28th year as a provider of general purpose quantitative decision-making tools and services, boasting the same core development team since the initial release of @RISK: World Headquarters: Ithaca, New York Palisade Europe: London, England Palisade Asia-Pacific: Sydney, Australia Palisade LTA: Rio de Janeiro, Brazil Palisade Japan: Tokyo, Japan Sales, Marketing, Training/Consulting, and Ops/Fulfillment also have team members with 10+ years service time. Palisade is proud to be employee owned.

  4. Palisade Corporation - Education Solid Academic Backing:Palisade products are used in curriculums at more than 100 MBAprograms worldwide, as well as in thousands of other academic fields at the undergraduate and postgraduate levels.Palisade software is the featured Monte Carlo simulation product in dozens of academic textbooks.Allied with professional development organizations:Palisade is accredited as a PMI R.E.P. or Project Management institute Registered Education Provider.Palisade is registeredwith the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. Other alliances available as needed.

  5. Thousands of companies worldwide in all areas of business and industry, including a majority of Fortune 500 companies - amounting to hundreds of thousands of users, make productive use of Palisade software every day.

  6. What is risk, exactly? • Vague term used in many ways by many people • In modeling, it can be positive (opportunity) • Uncertainty (estimate accuracy) • Variability (random or quasi-random) • Likelihood of occurrence, size of impact • Everybody knows about them! • Common “most likely” estimates are hedged • Software allows us to incorporate ranges into modeling

  7. Where do we find risks to model? • Everywhere! (It’s a multi-tool, not a hammer) • Investment • Retirement • Currency/options/VAR/DCF/etc. • Insurance • Losses/premium pricing/choosing a plan • Energy • Futures pricing • Production capacity consumption projection • Manufacturing • Equipment lifecycle • Inventory Management • Pharma/Health Care • R&D • Disease transmission and response planning • people

  8. DecisionTools Suite • Integrated risk and decision analytics • All products add-in to Excel & include XDK • @RISK – Simulation • RISKOptimizer and Evolver – Optimization • PrecisionTree – Decision Tree analysis • NeuralTools – Neural network prediction • StatTools – Statistical analytics • TopRank – Sensitivity Analysis

  9. @RISK combines Monte Carlo Simulation with other statistical techniques to give you: • The relative likelihood of all possible outcomes to your model. • The impact of variation within uncertain inputs has on the outcomes of your model. • A breakdown of the key drivers in your model: What pushes profits forward? What leads to losses? • A better understanding of where to focus your mitigation resources. • Clear, user-friendly graphs and reports to communicate findings to decision makers regardless of statistical savvy.

  10. RISKOptimizer - Functionality • Included with @RISK Industrial and DecisionTools Suite Industrial • Combines @RISK’s Monte Carlo simulation with genetic-algorithm based optimization • Allows for optimization of aspects of a distributed objective and solving of complex non-linear models • More robust than a deterministic optimization • Customers originally combined @RISK and Excel’s Solver for stochastic optimization

  11. RISKOptimizer - Applications • Portfolio optimization and allocation • Project selection • Capacity planning and production optimization • Scheduling (job shop, manpower) • Bidding • Inventory management • Prototyping/component interaction

  12. PrecisionTree - Functionality • Decision trees can be built directly in Excel • Allows for large-scale options models to be built over underlying models • Evaluate tree by standard tree calc, objective function, worksheet calc, macro, etc. • Can be combined with @RISK for stochastic decision tree analysis • Customers originally combined @RISK and DPL/DATA

  13. PrecisionTree - Applications • Real Options • Exploration/Production • Game theory • Structural integrity planning • Resource management • Classification/evaluation • Diagnosis/treatment

  14. NeuralTools - Functionality • Palisade’s first product to truly meld qualitative and quantitative analysis via Neural networks • Offers multiple neural network types and “BestNet” search to determine best network • Requires no neural network expertise • Verifies it’s own results with instant LiveUpdates • Analyze categorical data in concert with statistics • LiveUpdate works with RISKOptimizer to find optimal answers to questions based on your network

  15. NeuralTools - Applications • Credit scoring/loan underwriting • Market pricing/prediction (energy, etc.) • Environmental analysis • Fraud notification • Counter-terrorism • Medical diagnosis/treatment • Drug efficacy

  16. StatTools • Collection of statistical processes in Excel for data analysis without leaving the spreadsheet • Forecasting & Regression • ANOVA/Correlation/covariance • Non-parametric tests • Much more • Replaces statistical processes identified by our clients as unstable or inaccurate in Excel • Supports up to 16 million data points/variable • Created Excel 2007 before 2007 existed! • XDK for custom function creation

  17. TopRank • Utility for sensitivity analysis in Excel • Determine which model inputs drive volatility • Can be used on *any* Excel model • Cut down on model-building time by identifying the factors that require distributions for simulation • Risk analysis and mitigation in moments – as well as elimination of supposed risks

  18. @RISK for Project • Simulation modeling in MS Project • Add uncertainty to: • Tasks • Durations • Calendars • Resources . . . anywhere in Project • Risk-adjusted Gantt chart w/criticality and cruciality • @RISK6 will blend @RISK for Excel and @RISK for Project into a single unified application for cost/schedule risk analysis.

  19. Questions? Dave Bristol dbristol@palisade.com 802-876-7906

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