Dave Bristol, Eastern Region Sales Manager

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Palisade Corporation Risk modeling and analysis
in Excel
Dave Bristol, Eastern Region Sales
Manager 800-432-7475 x333, dbristol_at_palisade.com h
ttp//www.palisade.com
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Agenda
Palisade Corporation Overview What is
risk? Using Excel modeling to better understand
how risk impacts our work
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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 _at_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.
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Palisade Corporation - Education
Solid Academic Backing Palisade products are
used in curriculums at more than 100 MBA
programs 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 registered with 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.
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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.
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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

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Where do we find risks to model?

• Everywhere! (Its 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
• RD
• Disease transmission and response planning

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DecisionTools Suite

• Integrated risk and decision analytics
• All products add-in to Excel include XDK
• _at_RISK Simulation
• RISKOptimizer and Evolver Optimization
• PrecisionTree Decision Tree analysis
• NeuralTools Neural network prediction
• StatTools Statistical analytics
• TopRank Sensitivity Analysis

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_at_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.

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RISKOptimizer - Functionality

• Included with _at_RISK Industrial and DecisionTools
  Suite Industrial
• Combines _at_RISKs 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 _at_RISK and Excels
  Solver for stochastic optimization

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RISKOptimizer - Applications

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

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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 _at_RISK for stochastic
  decision tree analysis
• Customers originally combined _at_RISK and DPL/DATA

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PrecisionTree - Applications

• Real Options
• Exploration/Production
• Game theory
• Structural integrity planning
• Resource management
• Classification/evaluation
• Diagnosis/treatment

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NeuralTools - Functionality

• Palisades 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 its 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

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NeuralTools - Applications

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

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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

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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

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_at_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
• _at_RISK6 will blend _at_RISK for Excel and _at_RISK for
  Project into a single unified application for
  cost/schedule risk analysis.

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Questions? Dave Bristol dbristol_at_palisade.com 802
-876-7906
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