DAVID VOSE: 4 huge mistakes risk managers make when performing risk analysis on a budget or project
2.7 هزار بار بازدید -
6 سال پیش
-
David's risk modeling discovery has
David's risk modeling discovery has implications on how we do risk modeling, and understanding the four main operators can help us accurately calculate financial risks.
00:00 - David's 20-year-old discovery of risk modeling has implications on how we do risk modeling, and he has structured it in a logical way to help us avoid mistakes when adding volatility to our business plans, budgets, and investments.
04:53 - Adding and subtracting distributions is different than adding and subtracting numbers, and understanding the four main operators can help solve many problems related to correlations between variables.
12:38 - Add individual distributions together for uncorrelated probability distributions, input a distribution of variables to get a fast answer, and use F9 key to ensure internal consistency when manipulating numbers.
21:42 - Making it easier to use technology doesn't always go well, and multiplying cost distributions can lead to overestimating uncertainty.
28:05 - Aggregate functions in Excel can be used to simulate business plans, investments, and budgets, but calculations can be wrong and lead to incorrect results.
34:01 - Divide total revenue by the probability distribution of individual spending to calculate the number of customers, but be aware of the risks when using the summerstop function and avoid common mistakes when conducting risk analysis models.
44:36 - Risk analysts should use Excel to calculate profit, fair means, and probability multiplied by consequences to ensure accuracy.
50:11 - Risk analysts should understand basic probability and use simulations to properly calculate financial risks to get executive attention and trust.
If you attended live, I know you enjoyed the webinar, because the informational value was enourmous. If you just about to watch it in replay, brace yourself. There is 95% this will forever change how you model risks inside the business plan, budget or investment project.
Find out how many risk managers are overestimating risks by 3+ times when modeling risks and how to avoid this error. Learn why multiplying probability and impact makes no mathematical sense and actually produces a huge error in judgement.
DAVID'S BOOKS: https://www.amazon.com/David-Vose/e/B...
DOWNLOAD THE MATH PAPER: https://www.vosesoftware.com/knowledg...
Quantitative risk analysis involves a wide range of skills and tasks that risk modelers need to have mastered before embarking on an important risk analysis of their own. Among the most over-looked and underestimated of these skills is knowledge of how to manipulate variables within Monte Carlo simulation models which is the standard modeling technique for risk analysis.
Most risk analyses are performed using Excel with a Monte Carlo add-in like our software, ModelRisk. There is a widely held belief that one can take a standard spreadsheet model (e.g. a cashflow model with EBITDA or NPV calculation) and simply replace any value within that model that is uncertain with a function that generates random samples from some distribution to reflect its uncertainty. People mistakenly think that the rest of the model’s logic can be left unchanged.
And it really does matter. Incorrect manipulation of uncertain variables in a model will almost always produce simulation results with something close to the correct average value, which people use as a ‘reality check’, but completely wrong spread around that average value. The net effect is that decisionmakers are presented with a wildly inaccurate estimate of the uncertainty (risk) of the outcomes of different decision choices. Some may realize that the model results are unrealistic and dismiss them, while others won’t and will make very misguided decisions.
Translated titles:
DAVID VOSE: 4 grandes errores que cometen los gerentes de riesgos al realizar análisis de riesgos e
DAVID VOSE: 4 große Fehler, die Risikomanager bei der Durchführung von Risikoanalysen für ein Bud
DAVID VOSE: 4 énormes erreurs commises par les gestionnaires de risques lors de l'analyse des risqu
DAVID VOSE: 4 grandes erros que os gerentes de risco cometem ao realizar a análise de risco em um o
डेविड वॉस: बजट या प्रोजेक्ट पर जोखिम व
DAVID VOSE: 4 أخطاء كبيرة يرتكبها مديرو المخاطر عند إجراء تح
大卫·沃斯(David VOSE)：风险经理在对预算或项目进行风险分析时犯下的4个重
Join this channel as a member for new videos, RAW workshops or online courses @riskacademy
Read more risk management articles at https://riskacademy.blog/
Watch the best practical workshops and case studies from RISK AWARENESS WEEK https://riskacademy.vonza.com/
Check out awesome risk management quantitative software https://www.archerirm.com/insight-ris...
00:00 - David's 20-year-old discovery of risk modeling has implications on how we do risk modeling, and he has structured it in a logical way to help us avoid mistakes when adding volatility to our business plans, budgets, and investments.
04:53 - Adding and subtracting distributions is different than adding and subtracting numbers, and understanding the four main operators can help solve many problems related to correlations between variables.
12:38 - Add individual distributions together for uncorrelated probability distributions, input a distribution of variables to get a fast answer, and use F9 key to ensure internal consistency when manipulating numbers.
21:42 - Making it easier to use technology doesn't always go well, and multiplying cost distributions can lead to overestimating uncertainty.
28:05 - Aggregate functions in Excel can be used to simulate business plans, investments, and budgets, but calculations can be wrong and lead to incorrect results.
34:01 - Divide total revenue by the probability distribution of individual spending to calculate the number of customers, but be aware of the risks when using the summerstop function and avoid common mistakes when conducting risk analysis models.
44:36 - Risk analysts should use Excel to calculate profit, fair means, and probability multiplied by consequences to ensure accuracy.
50:11 - Risk analysts should understand basic probability and use simulations to properly calculate financial risks to get executive attention and trust.
If you attended live, I know you enjoyed the webinar, because the informational value was enourmous. If you just about to watch it in replay, brace yourself. There is 95% this will forever change how you model risks inside the business plan, budget or investment project.
Find out how many risk managers are overestimating risks by 3+ times when modeling risks and how to avoid this error. Learn why multiplying probability and impact makes no mathematical sense and actually produces a huge error in judgement.
DAVID'S BOOKS: https://www.amazon.com/David-Vose/e/B...
DOWNLOAD THE MATH PAPER: https://www.vosesoftware.com/knowledg...
Quantitative risk analysis involves a wide range of skills and tasks that risk modelers need to have mastered before embarking on an important risk analysis of their own. Among the most over-looked and underestimated of these skills is knowledge of how to manipulate variables within Monte Carlo simulation models which is the standard modeling technique for risk analysis.
Most risk analyses are performed using Excel with a Monte Carlo add-in like our software, ModelRisk. There is a widely held belief that one can take a standard spreadsheet model (e.g. a cashflow model with EBITDA or NPV calculation) and simply replace any value within that model that is uncertain with a function that generates random samples from some distribution to reflect its uncertainty. People mistakenly think that the rest of the model’s logic can be left unchanged.
And it really does matter. Incorrect manipulation of uncertain variables in a model will almost always produce simulation results with something close to the correct average value, which people use as a ‘reality check’, but completely wrong spread around that average value. The net effect is that decisionmakers are presented with a wildly inaccurate estimate of the uncertainty (risk) of the outcomes of different decision choices. Some may realize that the model results are unrealistic and dismiss them, while others won’t and will make very misguided decisions.
Translated titles:
DAVID VOSE: 4 grandes errores que cometen los gerentes de riesgos al realizar análisis de riesgos e
DAVID VOSE: 4 große Fehler, die Risikomanager bei der Durchführung von Risikoanalysen für ein Bud
DAVID VOSE: 4 énormes erreurs commises par les gestionnaires de risques lors de l'analyse des risqu
DAVID VOSE: 4 grandes erros que os gerentes de risco cometem ao realizar a análise de risco em um o
डेविड वॉस: बजट या प्रोजेक्ट पर जोखिम व
DAVID VOSE: 4 أخطاء كبيرة يرتكبها مديرو المخاطر عند إجراء تح
大卫·沃斯(David VOSE)：风险经理在对预算或项目进行风险分析时犯下的4个重
Join this channel as a member for new videos, RAW workshops or online courses @riskacademy
Read more risk management articles at https://riskacademy.blog/
Watch the best practical workshops and case studies from RISK AWARENESS WEEK https://riskacademy.vonza.com/
Check out awesome risk management quantitative software https://www.archerirm.com/insight-ris...
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