Risk Tools

Each of the risk models used in this web site was developed for use with two Monte Carlo simulation tools: @RISK for Excel and ModelRisk. If you would like to try using any of the models, but have access to neither tool, trial copies of the full applications can be downloaded from:

@Risk for Excel: www.palisade.com

ModelRisk: www.vosesoftware.com

The Palisade and Vose Software sites also provide free access to useful technical data and case studies.

When first using either tool, the following tips might be helpful:

  1. The risk tool functions are accessed on the ribbon located at the end of the row of headers for other Excel ribbons
  2. Before running a simulation, check the simulation settings. You will be able to choose factors such as the number of iterations and whether or not to use the same seed for each simulation (5,000 iterations is usually sufficient).
  3. The advantage of choosing to run simulations from the same seed is that the model will produce the same results each time it is run, unless it changed in some other way. It thus provides assurance that a model has not been changed, whether inadvertently or otherwise.
  4. If the Excel spreadsheet is in automatic recalc mode and the risk tool simulation settings set to random values, you can press the F9 key to view randomly generated iterations one at a time. This is a handy way of checking that the model is working as intended.
  5. If have built your own model, use the risk tool's Add Output function to identify the model's output(s). Without this, you will not obtain any results! (You should find that the models that can be downloaded from this site have already been prepared in this manner).
  6. To obtain reports on the relationships between inputs and outputs (e.g. tornado charts) the tool also needs to recognise which spreadsheet cells contain inputs. If using ModelRisk, inputs can be selected by using the Output/Input function and adding the relevant inputs. @RISK for Excel identifies inputs automatically.
  7. If you can't obtain the precise format of graph you would like from the tool, you can often create it by exporting or copying the simulation statistics into Excel and using Excel graphs function.
  8. Palisade and Vose Software both provide a lot more guidance and information via their web sites.
  9. I should, perhaps, stress that I have not worked for Palisade or Vose Software and have no commercial interest in either product. However, if you gave me a copy of either @RISK for Excel or ModelRisk to develop a project NPV risk model, I confirm, as an independent user, that I would be very happy.

There are other similar spreadsheet-based Monte Carlo simulation tools on the market and I have no reason to  believe that they would not also be suitable for the same purpose. A key point to note about such tools is that their use of spreadsheets gives the user a flexible medium in which to develop their model. Best practice approaches to model development require this type of flexibility. Brainwork should always be part of the process!