Course Description

This hands-on course demonstrates advanced techniques EC RISK USA & EUROPE, LLC has found useful in its consulting activities. We explain how to use Crystal Ball Premium to perform quantitative risk assessments focusing on financial decisions. We also show how to use the analysis results to improve decision-making-from exposure identification, quantification, and mitigation. In addition, we introduce the concept of real options-how to identify and quantify the flexibilities that exist in decisions. These techniques are presented in the context of new and current projects and acquisitions. We show you how to identify and analyze the key uncertainty drivers, which form the basis for efficient risk and opportunity management strategies.

Day 1: Introduction to Advanced Techniques

1. Accelerated review of risk analysis using Crystal Ball: Working through a simple example
   a) Model structure
   b) Selecting distributions
   c) Recommended Crystal Ball settings
   d) Custom report
   e) Assessing the risk
   f) Testing mitigation alternatives
   g) Reporting results
2. Modeling techniques: Modeling conditional events
3. Modeling Correlation
   a) Building interdependence between uncertain inputs
   b) Exercises

Day 2: Modeling the Key Components of a Risk Analysis

1. Selecting a sound distribution
   a) Quantifying expert judgment
   b) Fitting distributions to uneven data
   c) Exercises
2. Modeling uncertainty over time (time series uncertainty):
   a) Ad Hoc Methods
   b) Regression
   c) Exercises
3. Developing a Crystal Ball model step-by-step: Project Valuation (NPV) w/o Flexibility
4. Extending Crystal Ball models: Finding the best values for decision cells in the models using OptQuest.

Day 3: Introduction to Real Options -- Valuing Flexibility Using ROAT 2.1

1. Introduction to Real Options
2. Learning 3 different solution methods:
   a) Black-Scholes
   b) Binomial Lattices
   c) Monte Carlo Simulation
3. Exercises

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