As we are constantly faced with uncertainty and variability, risk and forecast analysis is part of every decision you make. And even though we have unprecedented access to information, we can’t accurately forecast the future. But with Monte Carlo simulation, we have the next best thing to a superpower.
Monte Carlo simulation (also known as the Monte Carlo method) lets you see all possible outcomes of your decisions, including the actual probabilities each will occur, by running simulations with random variables thousands of times. These variables are described by their probability distribution which can be estimated with historical data or defined using expert opinion. Then, with risk analysis software like @RISK, you can run sensitivity analysis to identify which variables have the largest impact on the outcome. This method lets you quantitatively assess the impact of risk, allowing for more accurate forecasting and, ultimately, better decision-making under uncertainty.
|Feature||Benefit||Professional Edition||Industrial Edition|
|Optimization under uncertainty||Combines Monte Carlo simulation with sophisticated optimization techniques to find optimal solutions to uncertain problems. Used for budgeting, allocation, scheduling, and more.|
|Efficient Frontier Analysis||Especially useful in financial analysis, Efficient Frontiers determine the optimal return that can be expected from a portfolio at a given level of risk|
|Ranges for adjustable cells and constraints||Streamlined model setup and editing|
|Genetic algorithms||Find the best global solution while avoiding getting caught in local, “hill-climbing” solutions|
|Six solving methods, including GAs and OptQuest||Always have the best method for different types of problems|
|RISKOptimizer Watcher and Convergence Monitoring||Monitor progress toward best solutions in real time|
|Overlay of Optimized vs Original Distribution||Compare original output to optimized result to visually see improvements|
|Original, Best, Last model updating||Instantly see the effects of three solutions on your entire model|
Lumivero’s @RISK software puts this powerful technique within reach for any Excel user faced with uncertainty in their analyses. @RISK makes it easy to graphically define risk models, run simulations, and analyze the results, all with the click of a mouse. @RISK is 100% integrated with Excel, adding hundreds of new functions to Excel so that users can quickly understand their risks without learning a new application. First introduced in 1987 for Lotus 1-2-3, @RISK has a long-established reputation for computational accuracy, modeling flexibility, and ease of use, making it the dominant Monte Carlo simulation software in the market today.