Overview of @RISKThe Need for Risk Analysis
You make decisions every day. Where to invest, what product to produce, which vendor to use, what price to charge - the list is endless. You probably base your decisions on whatever data you have on hand - historical costs, competitors' prices, vendor estimates, etc. But how often do you have full, complete information? Prices change, demand fluctuates, costs rise. It's easy to make the wrong decision if you don't take all possible scenarios into account. Making the best decisions means performing risk analysis. And there's no easier, more powerful solution than @RISK, the world's most widely used risk analysis tool!
Have you ever seen a financial spreadsheet representing multimillion-dollar ventures containing only best case, worst case, and most likely scenarios? Or, have you worked in situations where marketing, R&D, engineering, and other key decisions were based on "best guess" estimates of factors like demand, market share, and effects of competition? Chances are if you work in pharmaceuticals, consumer products, financial planning, manufacturing, oil and gas, the military, energy, government, securities, insurance, or virtually any other industry, the answer to these questions is "Yes!" The fact is that the vast majority of Fortune 1000 companies, universities, and government agencies make multimillion-dollar decisions without taking more than three different possible outcomes into account! In reality, there are almost always dozens -- if not thousands -- of possible scenarios that could affect an organization's bottom line. Recent high-profile debacles like Enron, Ford's $5 billion loss, Orange County California, and others have shown what can happen when companies ignore these various possibilities.
@RISK Shows You ALL Possible Outcomes
@RISK changes all that. @RISK lets you see all possible outcomes in your situation - and tells you how likely they are to occur! What this means for you -- the decision maker -- is that you finally have, if not perfect information, the most complete picture possible. You will see what could happen, how likely it is to happen, and therefore be able to judge accordingly which risks to take and which ones to avoid. While no software package can predict the future, @RISK can enable you to choose the best personal strategy based on the available information. That's not a bad guarantee!
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@RISK Works Where You Work - In Excel
@RISK is an add-in to Microsoft Excel. As an add-in, @RISK becomes seamlessly integrated with your spreadsheet, adding risk analysis to your existing models. Working with @RISK is as easy as working in your existing spreadsheets, so there's almost no learning curve!
@RISK uses a technique known as Monte Carlo simulation to show you all possible outcomes. Running an analysis with @RISK involves three simple steps:
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Start by replacing uncertain values in your spreadsheet model with @RISK probability distribution functions. These @RISK functions simply represent a range of different possible values that cell could take instead of limiting it to just one value.
2. Pick Your Bottom Line
Next, select your output cells - the "bottom line" cells whose values you are interested in. This could be potential profits for a new product launch, insurance claims payout, disease recovery rate, anything at all.
3. Simulate
Then click the "Simulate" button and watch. It's that easy! @RISK recalculates your spreadsheet model hundreds or thousands of times! There is no limit to the number of different scenarios you can look at in your simulations. Each time, @RISK samples random values from the @RISK functions you entered and records the resulting outcome. The result: a look at a whole range of possible outcomes, including the probabilities they will occur! Almost instantly, you will see what critical situations to seek out - or avoid!
 Quick Reports give you all the information you need in a single click! |
Present Results with Stunning Graphs
@RISK provides a wide range of graphing options for interpreting and presenting your results to others. Create histograms, cumulative curves, area and line graphs - all without touching your keyboard! Right-click menus and handy toolbars make navigation a snap. Use overlay graphs to compare several results on one graph. You can even create summary graphs that display risk over a range of time or across outputs! Sliding delimiter bars make reading probabilities of different outcomes a breeze. Customize your graphs by adjusting the scaling, axis labels, titles, colors, and more! All graphs may be copied to the Windows clipboard or exported directly to Excel.
@RISK also gives you a full statistical report on your simulations, as well as access to all the data generated. Plus, you can generate a one-page, pre-formatted, ready-to-print Quick Report with a single mouse click. Quick Reports include cumulative graphs, Tornado charts for sensitivity analysis, histograms, and summary statistics.
 Choosing distributions is easy with @RISK's pop-up distribution viewer, RISKview. |
Choosing which @RISK distribution function to use for a cell containing uncertain values doesn't have to be complicated. @RISK comes with RISKview - a built-in distribution viewer that less you preview various distributions before selecting them. You can choose distributions from a gallery of thumbnail distribution pictures, and then watch as @RISK builds a graph of the distribution for you while you enter your parameters.
@RISK even lets you define parameters two ways - using standard parameters or percentiles. For example, if you have a cost that is usually around $50,000 but fluctuates between $40,000 and $60,000, you might pick a normal distribution with a mean of $50,000 and a standard deviation of $7,500. Or, you could set up your normal distribution defining the 10th percentile as $40,000 and the 90th percentile as $60,000, meaning 80 percent of the time it's between these two values.
What if you don't know which distribution to use, but you just want to draw a curve free-hand using your expert intuition? No problem! @RISK provides a Distribution Artist that lets you do just that!
 Use your data to determine the best distribution for your models using BestFit. |
Say you are building your spreadsheet model and you know what costs have historically been for your product's materials. @RISK lets you use that data to accurately describe what the material costs might be in your project! Just use BestFit - @RISK's built-in distribution fitting tool (Professional and Industrial editions only). Read your data into @RISK, and with the click of a button BestFit will find the @RISK distribution function that best describes it. Another click, and the distribution is written directly to your spreadsheet model!
BestFit ranks dozens of distributions against your data, provides graphs that compare your data against the fits, and more! You can even "hot link" your data so that your distribution automatically updates when the source data changes.
Identify the Factors That Cause Risk
@RISK provides you with Sensitivity and Scenario Analyses to determine the critical factors in your spreadsheet models. Use Sensitivity Analysis to rank the uncertain factors in your model according to the impact they have on your bottom-line output cells. See the results clearly with an easy-to-interpret Tornado diagram!
 Easy-to-interpret Tornado diagrams identify your risk factors at a glance. |
Both analyses let you gain insight into your situation that your competition won't have, and learn how to increase profits and avoid pitfalls!
@RISK Professional
@RISK 4.5 is available in three editions to meet your risk analysis needs: Standard, Professional, and Industrial. @RISK Professional adds a host of analytical power features to your arsenal:
Integrated BestFit: Fits distribution functions to your data (see above).
@RISK Goal Seek: Finds the value of an input that leads to a desired simulation result. You set the target value - or goal - and tell @RISK which input to adjust to achieve your goal. @RISK uses multiple simulations to find the input that achieves that goal.
Stress Analysis: Lets you control the range that is sampled within an input distribution. By specifying extreme ranges of a given input, you can see how different scenarios would affect your bottom line without changing your model around.
 Box-Whisker Plots from a Stress Analysis are one of many different reports available with @RISK's Advanced Analyses. |
@RISK Industrial
@RISK 4.5 Industrial is well-suited to the power risk analyst. @RISK Industrial builds upon @RISK Professional by adding:
Integrated @RISKAccelerator: Speed up large simulations by using all CPUs in a multi-CPU machine. If your PC has two processors, your simulations will run nearly twice as fast! Also available separately, @RISKAccelerator can be configured to utilize available CPUs over a network (see Related Products).
RISKOptimizer: Optimize the results of your @RISK simulations with this unique tool. Combining the power of Monte Carlo simulation with genetic algorithm-based optimisation techniques, RISKOptimizer finds the best combination of inputs that maximize or minimize simulation results. Also available separately.
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The power of @RISK can be enhanced and expanded beyond Excel using these other tools from Palisade:
@RISKAccelerator
@RISKAccelerator uses the multiple CPUs found in a single computer or over a network to dramatically increase the speed of @RISK simulations. Simulation speed increases almost linearly with the number of CPUs used. If you have large models spanning many worksheets or workbooks, or you need to run simulations frequently for on-the-spot decision making, @RISKAccelerator is for you! Click here for more information.
@RISK Developer's Kit
Apply @RISK's Monte Carlo simulation engine, incredible charting, and all other features to any custom Windows application! Run simulation models over the web or your corporate intranet! Included ActiveX interface and BestFit Developer's Kit make programming easy.
@RISK for Project
Account for uncertainty in your Microsoft Project models! Replace factors such as task duration, costs, and resources with @RISK distribution functions and run a simulation to see all possible project outcomes. Answer questions such as "What are the chances of this project finishing under budget and by the deadline?" Click here for more information.