using oracle crystal ball to calculate risk and uncertainty
TRANSCRIPT
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The Element of Risk: Using Oracle Crystal Ball to Calculate Risk and
Certainty
Lucie Trepanier
Solution Specialist
February 24, 2010
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Program Agenda
Business Challenges
Across Industries
Applications in Financial Services
Oracle Solution
Live demonstrations
Benefits and Conclusion
Q&A
Business Challenges
Metrics are Necessary. Are they Sufficient?
• I can invest in Portfolio A
Or
• I can invest in Portfolio B
Business Challenges
Metrics are Necessary. Are they Sufficient?
• I can invest in Portfolio A
• With a calculated value of $10 million
Or
• I can invest in Portfolio B
• With an calculated value of $20 million
Business Challenges
Metrics are Necessary. Are they Sufficient?
• I can invest in Portfolio A
• With a calculated value of $10 million
• And a 90% certainty of achieving that value
Or
• I can invest in Portfolio B
• With an calculated value of $20 million
• And a 40% certainty of achieving that value
Business Challenges
Metrics are Necessary. Are they Sufficient?
• I can invest in Portfolio A
• With a calculated value of $10 million
• And a 90% certainty of achieving that value
• And a 100% certainty of a positive return
(<$0 value)
Or
• I can invest in Portfolio B
• With an calculated value of $20 million
• And a 40% certainty of achieving that value
• And a 3% certainty of a $100 million or
more return
Business Challenges Across Industries
Variability built in to planning of all kinds: strategic,
financial, operational.
Accuracy in forecasting of any kind: sales, expenses,
business performance, revenue.
Uncertainty in portfolio investment, capital
expenditures and project selection
Risk inherent in any innovation process: product
launch, engineering design, new markets.
Business Challenges Across Industries
Variability built in to planning of all kinds: strategic,
financial, operational.
Accuracy in forecasting of any kind: sales, expenses,
business performance, revenue.
Uncertainty in portfolio investment, capital
expenditures and project selection
Risk inherent in any innovation process: product
launch, engineering design, new markets.
planning
forecasting
portfolio investment
innovation
Business Challenges Across Industries
Variability built in to planning of all kinds: strategic,
financial, operational.
Accuracy in forecasting of any kind: sales, expenses,
business performance, revenue.
Uncertainty in portfolio investment, capital
expenditures and project selection
Risk inherent in any innovation process: product
launch, engineering design, new markets.
Variability
Accuracy
Uncertainty
Risk
• Accurately forecast the future with or without historical data
• Identify and model uncertainty and variability around key drivers and know where to focus scarce resources
• Report on feasible solutions to risk scenarios that account for uncertainty.
What Must Be Added to the Framework?
Variability
Accuracy
Uncertainty
Risk
Provide risk measurements that
complete the evaluation of strategic
opportunities
Gain insight into the probabilities
of success in achieving a desired
outcome, not just the possibilities
Crystal Ball customer use cases in Financial
Services
Broad application in measuring risk, certainty ranges
and other statistics. Used to augment efficiency and
accuracy in:
Wealth management
Credit risk modeling (Loss Given Default, Percentiles,
Conditional Value at Risk, etc)
Retail risk, credit risk, loan risk
Pricing loan products
Bank capital adequacy
Marketing – design of card loyalty programs
Six Sigma process improvement programs
Oracle SolutionCrystal Ball
The leading spreadsheet-based
application suite for predictive modeling,
forecasting, simulation, and optimization.
A realistic and accessible way of
modeling uncertainty, measuring and
reporting on the risk inherent in key
metrics.
• Unparalleled insight into the critical factors and key drivers affecting
risk.
• Twenty plus years across multiple industries and applications, with a
strong academic program worldwide.
Demonstrations
Using Crystal Ball to measure risk and certainty
1. Forecasting a return on investments in a portfolio
and quantifying the certainty of achieving that
return.
2. Improving the overall portfolio return by optimizing
the investment decisions.
3. How to use the same techniques in an integrated,
enterprise type of deployment, with Business
Intelligence.
Benefits and Conclusion
Risk measurement techniques such as time-series forecasting,
Monte Carlo simulation and Optimization can be used to
calculate the uncertainty inherent in the numbers, and report on
both value and risk combined.
Provide risk measurements that complete the evaluation of
strategic opportunities
Gain insight into the probabilities of success in achieving a desired
outcome, not just the possibilities
Accurately forecast the future with or without historical data
Identify and model uncertainty and variability around key drivers
and know where to focus scarce resources
Report on feasible solutions to risk scenarios that account for
uncertainty.
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For More Information
Crystal Ball GSU
+1.303.334.6842
Trial version of the software with example models shown in presentation:
LUCIE TREPANIER7700 Technology WayDenver, CO 80238USA
http://www.oracle.com/technology/products/bi/crystalball/index.html
And select the Free Download button in upper right hand side
