Carl H. Lindner College of BusinessCarl H. Lindner College of BusinessUniversity of Cincinnati

Carl H. Lindner College of Business

Risk Analytics Day

The Center for Business Analytics hosted  Risk Analytics Day on February 11 2015  8AM - 4:30PM at the Tangeman University Center (TUC) on the campus of the University  of Cincinnati.

 

Three speakers presented in the AM and the afternoon was hands on risk analysis and simulation.

Speakers

  • "The Flaw of Averages and How to Cure It"  Sam L Savage
  • "Benford’s Law as a Risk Analytics Tool"  Mark Nigirini
  • "Valid Models and Analysis of Risk in Complex Real-World Settings:  Simulation as a Method of Choice" David Kelton

Software Demonstrations

  • Hands-On Simulation Modeling and Analysis with Arena 14.50.
  • SIPmath™ interactive Simulation in Excel: 10,000 Trials Before Your Finger Leaves the <Enter> Key, Without Macros or Add-ins.
Sam Savage Risk Analytics Day Speaker

Sam L. Savage
Stanford University and probabilitymanagement.org; author of the
Flaw of Averages.

"The Flaw of Averages and How to Cure It"

The Flaw of Averages is a set of systematic errors that occur when single “average” outcomes are substituted for uncertain future forecasts. It masks both risks and opportunities. Today we have reached a technological tipping point in which new standards and methodologies may be applied directly within the common spreadsheet to simultaneously view thousands of future scenarios, and cure this endemic problem, which explains why so many projects are behind schedule, beyond budget, and below projection.Examples, with free downloadable Excel models will range from Energy Exploration and Finance, to disease propagation. No statistical background is assumed, but for those with extensive training in this area, this presentation will attempt to repair the damage.

Sam L. Savage is Executive Director of ProbabilityManagement.org, a nonprofit that is rethinking uncertainty through standards, best practices, and education. It has recently been cited in the MIT Sloan Management Review for “improving communication of uncertainty,” and “simulation-based communication to improve actual managerial decisions and public policies.” Dr. Savage is joined on the board by Harry Markowitz, Nobel Laureate in Economics, and the organization has received sponsorship from Chevron, General Electric, Lockheed Martin and Wells Fargo Bank. Dr. Savage is also author of the “Flaw of Averages: Why We Underestimate Risk in the Face of Uncertainty,” and is a Consulting Professor at Stanford University. He has been a Visiting Professor at Northwestern University's Kellogg School and the Naval Postgraduate School in Monterey, and is a Fellow of the Judge Business School at the University of Cambridge. Dr. Savage consults and lectures extensively to business and government agencies, and has served as an expert witness.

Mark Nigrini Risk Analytics Day Speaker

Mark Nigrini
West Virginia University; PhD  Accounting University of Cincinnati

"Benford’s Law as a Risk Analytics Tool"

In the 1930s, Frank Benford, a physicist at GE discovered that there were predictable patterns to the digits in lists of numbers.  He showed that the ten digits were not expected to occur evenly in tabulated data.  The digit 1 was expected to occur about six times as often as the digit 9.  Our talk on Benford’s Law will be interesting, entertaining and informative.  We’ll cover the reasons for the uneven distribution of the digits with examples of data sets showing near perfect conformity to Benford’s Law.  Then we’ll move on to some examples of fraudulent and erroneous data that deviated from Benford’s Law.  We’ll conclude with some cautions against drawing incorrect conclusions from our data and a website with free Benford’s Law software.

Mark Nigrini is the author of Forensic Analytics (Wiley, 2011) and Benford’s Law (Wiley, 2012).  His work is regularly featured in the press with a recent mention in a WSJ article in December, 2014.  He is also a regular presenter at The Association of Certified Fraud Examiners’ annual conferences and other fraud-related events.  Mark published a fraud-related article, co-authored with an incarcerated fraudster, in the August, 2014 issue of the Journal of Accountancy.  Mark is on the faculty at the College of Business and Economics at West Virginia University where he teaches auditing and forensic accounting.

David Kelton Risk Analytics Day Speaker

David Kelton
Professor, Department of Operations, Business Analytics, and Information Systems, University of Cincinnati; and Visiting Professor, Department of Operations Research, Naval Postgraduate School

"Valid Models and Analysis of Risk in Complex Real-World Settings:  Simulation as a Method of Choice"

The only thing that’s for sure is that nothing is for sure, so we need to consider uncertainty and risk in models of reality.  And the real world is a complicated place, so models of reality often need to be accordingly complicated in order to be valid, usually precluding exact mathematical analysis unless we make further and ridiculously over-simplifying assumptions that invalidate models to the point of being useless stylizations solely for the amusement of academics.  This talk will focus on valid simulation modeling and analysis, go over several sound applications of simulation in a variety of settings using current commercial simulation software, and conclude with what’s needed for continued success with simulation as a method of choice.

David Kelton received PhD and MS degrees in Industrial Engineering from the University of Wisconsin-Madison, an MS in mathematics from Ohio University, and a BA in Mathematics from Wisconsin.  He has also been on faculty at Penn State, Michigan, Minnesota, and Kent State.  In addition to 100 refereed publications (41 of them in archival journals) and 137 talks, he has co-authored three simulation books in a combined 12 editions that have sold over 224,000 copies and have been translated into five other languages.  His publications have been cited more than 19,000 times (per Google Scholar).  He was Editor-in-Chief of the INFORMS Journal on Computing for over seven years, during which time the journal rose from unranked to first of 54 operations-research journals on the ISI impact factor.  He is a Fellow of both INFORMS and IIE.

Afternoon Sessions

Hands-On Simulation Modeling and Analysis with Arena 14.50

David Kelton

In this hands-on afternoon session, participants will use the same commercial simulation software from the morning simulation talk to build, from scratch, several working simulation models, and run them to gain system insight, following highly structured and detailed laboratory-style instructions.  Solutions and answers will be provided up-front for comparison.  Participants should plan to bring their own laptops, and will receive instructions beforehand on how to download and install the Arena 14.50 student software, as well as files for the laboratory instructions and solutions.  The software runs only under Windows, but will work on a Mac via any of the Windows-emulation platforms (Boot Camp, Parallels, or VMware Fusion).

 

SIPmath™ interactive Simulation in Excel: 10,000 Trials Before Your Finger Leaves the <Enter> Key, Without Macros or Add-ins and it Costs Nothing!

Sam L. Savage

You will learn

  • How to build powerful risk dashboards in native Excel
  • How to integrate simulation results from @RISK, Crystal Ball, RiskSolver, Matlab, or any other simulation package using XML data
  • How to make the most of the free tools from ProbabiityManagement.org for facilitating SIPmath modeling
  • How to aggregate simulations across platforms, across the enterprise to model system wide risk
  • Why SIPmath is
    • endorsed by leading organizations
    • a game changer
    • better than sliced bread
    • doing for simulation what cold fusion would have done for energy if it had worked
    • too good to be true, but available now if you have Excel

Visit http://probabilitymanagement.org/sip-math.html to learn more

Bring your laptop so you can share in the fun

Risk Analytics Day
Risk Analytics Day Nigrini Talk
Risk Analytics Day Savage
Risk Analytics Day Nigrini Book
Risk Analytics Day Savage Book
Risk Analytics Day Kelton