Risk (or uncertainty) is inherent in any situation in which forecasting of one form or another is used. We often prefer to use the term “reality” rather than “risk” e.g. “reality modelling” in place of “risk modelling” or “reality assessment” in place of “risk assessment”!
Risk assessment is often overlooked or not integrated into financial models: Thus, the models are “precisely wrong, rather than approximately right”! Part of the reason is that many analysts find it difficult to accurately reflect a qualitative statement of risk/uncertainty (e.g. “there is a risk that the project may go over budget”) into the appropriate formulation within a quantitative (financial) model. Further, the models often need to be highly flexible and more flexible than regular Excel models, and such modelling skills are often not covered by standard training courses or professional qualifications.
Our training courses combine a number of elements in a very practical way:
- The ways to translate qualitative statements of risk/uncertainty into quantitative models
- Hands-on experience of building models
- Appropriate modelling techniques e.g. to increase model flexibility
- The relevant knowledge of probability and statistics
In addition, although much can be achieved by using only Excel with VBA, very often it is more effective to use a commercial add-in, such as @RISK®; typically, this removes the requirement for knowledge of VBA and also allows the creation of more transparent models. In fact, Michael Rees is Europe’s most experienced instructor and user of @RISK, having taught over 2000 people in more than 300 seminars since 2004, as well as having done many consulting engagements in that use the software. Therefore, most courses also involve the learning of the core components of such packages.
See a sample course agenda (click on the text once and then scroll to see all pages for the course; use the full screen option if desired as well):
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