Decision Xtreme

Software Summary

@RISK by Palisade Summary

The @RISK software package is the Risk Analysis and Simulation add-in for the Microsoft Excel spreadsheet application. A product of Palisade Corporation, @Risk is one of a suite of decision tools offered. Analyzing risk may include any methodology, whether qualitative and/or quantitative for assessing the impact of risk. The goal of these methods is to help the decision-maker choose a course of action that will reduce uncertainty and achieve the desired objective. The @Risk application uses a technique known as Monte Carlo simulation to take all possible outcomes into account. The result is a distribution of possible outcomes and the probabilities of getting those results. One of the strengths of Monte Carlo simulation is that is produces enough data to create accurate graphs such as histograms, cumulative curves, area and line graphs as examples. Summary graphics and multiple variable comparison overlays may also be displayed using the Excel format allowing access to all of Excel’s charting capabilities. All graphs include summary statistics in the same window and include probability bars and sliding delimiters to view probability results.

Other notable features of the @Risk package includes the Quick Report command. This summary reporting capability generates a one-page report in Excel containing a histogram, cumulative curve, tornado graph, and summary statistics automatically formatted for the user. Display and update capability are also available real-time as the simulation is running.

Two additional key features also include a Sensitivity Analysis and Scenario Analysis function. The Sensitivity Analysis allows the user to determine which input distributions have the biggest impact on the outputs. Tornado chart display capability provides longer bars at the top representing the significant input variables. Options to perform this type of analysis are in the form of a Rank-Order Correlation or Multi-variate Stepwise Regression model. With the Scenario Analysis functionality, combinations of inputs are identified which lead to output targeted values. The full range of features offered by this product are identified in Table 1.

True Spreadsheet Add-In / Full Data Report / Tornado Graphs
Toolbars for Most Commands / Reporting in Excel / Scenario Analysis
Office-style Interface / Target Values / Statistics Functions
@RISK Model Window / Histogram, Area, Line, and Cumulative Graphs / Macros - Execute During Simulation
37 Distribution Functions / Fully Customizable Graphs / Macros - Customize with VBA
Fully Integrated RISKview / Summary Graphs / @RISK Goal Seek (Pro and Industrial only)
Fully Integrated BestFit (Professional and Industrial versions only) / Multiple Summary and Overlay Graphs / Stress Analysis (Pro and Industrial only)
Distribution Palette / Sliding Delimiters on all Graphs / Advanced Sensitivity Analysis (Pro and Industrial)
Alternate (Percentile) Distribution Parameters / Real-time Updating of Graphs / Comprehensive Help File and Tutorial
Correlation of Inputs / Graph in Excel / Integrated RISKOptimizer (Industrial only)
Customizable Simulation Settings / One-step Quick Reports / Integrated @RISKAccelerator (Industrial only)
Convergence Monitoring / Multiple Simulations / Fully Integrated With DecisionTools Suite: @RISK, BestFit, TopRank, PrecisionTree, and RISKview
Full Statistics Report / Sensitivity Analysis - Multivariate Stepwise Regression and Rank Order Correlation

Table 1. @Risk 4.5 Features.

Risk analysis with the @Risk product seeks to determine the outcomes of a decision as a probability distribution. Four steps are identified to accomplish this task as follows:

1. Develop a Model - Define the problem or situation in an Excel worksheet format.
2. Identifying Uncertainty - Determine which inputs in the model are uncertain, and represent those using ranges of values with @RISK probability distribution functions. Identify which result or output of the model to analyze.
3. Analyze the Model with Simulation - Run the simulation to determine the range and probabilities of all possible outcomes for the outputs identified.
4. Make a Decision – With complete information from the analysis, and preferences, make a decision.

Model development, identified as step one, is the task of constructing a spreadsheet model representing the situation. The second step of representing uncertainty and evaluating probability can be accomplished using one of 37 @Risk probability distributions. These are listed in Table 2.

Beta / Exponential / Log-Logistic / Poisson
Beta General / Extreme Value/Gumbel / Lognormal / Rayleigh
Beta-Subjective / Gamma / Lognormal2 / Student's t
Binomial / General / Negative Binomial / Triangular
Chi-Square / Geometric / Normal / Triangular General
Cumulative / Histogram / Pareto / Uniform
Discrete / Hypergeometric / Pareto 2 / Weibull
Discrete Uniform / Int Uniform / Pearson V
Error Function / Inverse Gaussian/Wald / Pearson VI
Erlang / Logistic / PERT

Table 2. @Risk probability distributions.

The third step allows for the simulation and viewing of all possible outcomes. The number of parameters of simulation iterations can be customized to suit the needs of the user and can be updated in real-time numerically or graphically as @RISK is simulating. The user may also control the convergence criteria, and choose Monte Carlo or Latin Hypercube sampling. If full automation is desired, default settings are available. @RISK will recalculate the spreadsheet data hundreds or thousands of time, each time selecting random numbers from the @RISK functions entered and recording the resulting output. Each recalculation shows a possible combination of uncertain values or a "scenario" that could occur. At the end of the simulation, a whole range of possible outcomes, and the probabilities of them occurring are available for display. Lastly, the decision phase is an evaluation of comprehensive results provided by the @Risk package and the users threshold for risk. Back-to-back multiple simulations, input correlation, statistics and graphing, and custom applications provide the user with the foundation to achieve the goal of determining project risk.

Risk applications that the @Risk package has been used for are included in Table 3 and the @Risk pricing structure is listed as Table 4. Enhanced editions and functionality include:

  • @Risk Professional
  • Integrated BestFit
  • Goal Seek
  • Stress Analysis
  • Advanced Sensitivity Analysis
  • @Risk Industrial
  • RISKOptimizer to optimize simulation results
  • Accelerator

@RISK APPLICATIONS
Capital Budgeting / Insurance
Chemical Process Engineering / Mergers & Acquisitions
Corporate Planning / Mortgage Pricing
Cost Analysis / Operation Research Analysis
Engineering / Petroleum and Mining Resource Evaluations
Environmental Impacts & Policy / Retirement Planning
Financial Risk Analysis / R&D Assessment
Foreign Exchange Assessment / Toxicological Analysis

Health Risk Assessment

Table 3. Risk Applications.

Product

/ Regular Price / Download Only Price
@Risk 4.5 Standard / $710 / $685
@Risk 4.5 Professional / $950 / $925
@Risk 4.5 Industrial / $1790 / $1765
Upgrade to @Risk 4.5 Standard from @Risk 4.0 Standard / $310 / $310
Upgrade to @Risk 4.5 Professional from @Risk 4.0 Professional / $405 / $405
Upgrade to @Risk 4.5 Industrial from @Risk 4.0 Industrial / $690 / $690

Table 4. @Risk Pricing.

A detailed description of the @Risk application can be reviewed at Trial versions are available for download for up to 10 days after installation and have no limits on model size or features.

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