Business Risk and Simulation Modelling in Practice - (Wiley Finance) by Michael Rees (Hardcover)

Book Synopsis

The complete guide to the principles and practice of risk quantification for business applications.

The assessment and quantification of risk provide an indispensable part of robust decision-making; to be effective, many professionals need a firm grasp of both the fundamental concepts and of the tools of the trade. Business Risk and Simulation Modelling in Practice is a comprehensive, in-depth, and practical guide that aims to help business risk managers, modelling analysts and general management to understand, conduct and use quantitative risk assessment and uncertainty modelling in their own situations. Key content areas include:

• Detailed descriptions of risk assessment processes, their objectives and uses, possible approaches to risk quantification, and their associated decision-benefits and organisational challenges.
• Principles and techniques in the design of risk models, including the similarities and differences with traditional financial models, and the enhancements that risk modelling can provide.
• In depth coverage of the principles and concepts in simulation methods, the statistical measurement of risk, the use and selection of probability distributions, the creation of dependency relationships, the alignment of risk modelling activities with general risk assessment processes, and a range of Excel modelling techniques.
• The implementation of simulation techniques using both Excel/VBA macros and the @RISK Excel add-in. Each platform may be appropriate depending on the context, whereas the core modelling concepts and risk assessment contexts are largely the same in each case. Some additional features and key benefits of using @RISK are also covered.

Business Risk and Simulation Modelling in Practice reflects the author′s many years in training and consultancy in these areas. It provides clear and complete guidance, enhanced with an expert perspective. It uses approximately one hundred practical and real-life models to demonstrate all key concepts and techniques; these are accessible on the companion website.

From the Back Cover

Thousands of professionals have already gained a mastery of the fundamental concepts and latest tools of the trade from the training methods in Business Risk and Simulation Modelling in Practice--now it's your turn to bring game-changing insight to your organisation's boardroom.

Whether you're looking at budgeting, forecasting, corporate finance valuation, portfolio co position and optimisation, or cash flow analysis, this practical guide shows you the best ways to approach risk assessment and the most efficient techniques to analyse and present the hard data that business leaders need to make profitable decisions. Business planners and financial analysts receive guidance to risk modelling that is grounded in real-life solutions and that includes advice on how to overcome the challenges of instilling a more risk-aware culture in organisations with established processes and incentives. Rigorous, yet highly accessible coverage uses non-mathematical material to provide you with:

• The key principles of simulation methods and the relationships between simulation and other modelling techniques such as sensitivity, scenario, and optimisation analysis.
• The core aspects of risk-model design, including important similarities and differences to traditional static modelling, alignment with general risk assessment process, and integration into existing models.
• A discussion of more than 20 distributions, along with their uses and processes, as well as frameworks for selecting the proper ones, and methods to create random samples using Excel macros created with Visual Basic Applications (VBA).
• Excel template models for running simulations, creating versatile ways to store and analyse results, generating correlated random numbers and increasing simulation speed.
• A discussion of the benefits of Palisade's @RISK Excel add-in, including its sophisticated an flexible graphics capabilities; tools for rapidly building, testing, and modifying models; a larger set of available distributions and parameters; and greater capability to control simulation and random number selection.

While Palisade's @RISK add-in is used to demonstrate some key techniques, most coverage is software independent. This versatile book provides the tools to build a vast number of simulations in Excel, with VBA or @RISK.

Be prepared for every possible outcome with Business Risk and Simulation Modelling in Practice.

About the Author

MICHAEL REES is an independent consultant and trainer for financial modelling. He works for a wide range of clients, including major corporations, private equity firms, fund managers, strategy consultants and risk management consultants.