@Risk Arms Excel With Risk Analysis

SAN MATEO (03/20/2000) - Business decision-makers analyzing risk frequently work with spreadsheet models of business situations. However, the need to manually enter multiple variables quickly consumes too much time to make it practical to test a wide range of variables. Using a smaller set of variables results in decisions that are based on the review of a very small portion of the data model's possible outcomes -- sometimes just the best or worst case scenarios.

Palisade Software Corp.'s @Risk Professional 4.0, beta, automatically runs hundreds or even thousands of possible variable combinations, based on ranges defined by the user. The results are displayed in tables or a wide range of flexible graphs, all within the familiar interface of Microsoft Excel.

50,000 strong

Palisade Software touts @Risk as the most powerful solution available in the risk-analysis software market. It supports models with more than 50,000 probability distributions; a competing product, Crystal Ball from Decisioneering, supports about 1,500.

However, casual risk-analysis users may find @Risk's myriad controls and functions a little overwhelming, making a more basic package more appropriate.

I tested @Risk with Microsoft Excel 97. I installed the software in minutes and found the online tutorial to be a useful overview of the software and risk analysis in general.

Easy rider

Launching Excel in the standard way, I was glad to see no sign of the added @Risk toolbars; the @Risk toolbars and special functions appear only when the @Risk application is used to launch Excel, making it far less intrusive for frequent spreadsheet users.

Palisade's @Risk comprises three main components: the @Risk Model window, the @Risk Excel add-in, and the @Risk Results window. The Model window allowed me to designate inputs and outputs for my simulation, view input distributions, and define correlations.

The Results window provided me with a variety of output options, including interactive graphs and scenario reports. The Excel add-in provided special @Risk functions that could be typed directly into cells in my existing spreadsheets with just a few keystrokes.

Red-hot features

As I worked with some of @Risk's sample spreadsheet models, I found that the product uses colored text in the spreadsheets to make it easy to identify cell values that have special @Risk functions running behind them. This colored text shows users exactly where @Risk functions exist in any spreadsheet in which the @Risk functions are used, and makes it far easier to modify the spreadsheets.

I found Palisade's claims of high-speed simulations well-founded. My modest test platform, a Pentium II, 166MHz laptop, proved more than adequate to run simulations in a matter of just seconds.

Excellent reporting

Palisade @Risk's extensive and flexible graphing capabilities surpassed those available with Crystal Ball. I viewed my result sets as histograms, cumulative area graphs, or tornado graphs. Graphs viewed while running simulations are updated in real time, which provides a moving picture of the risk-analysis model results.

Furthermore, the graphs themselves contain a variety of controls for adjusting variables such as probability distribution. Advanced risk-analysis users and trained statisticians will find this level of control appealing.

Palisade's @Risk 4.0 Professional includes the BestFit application, which sold separately in previous versions. BestFit allows for distribution fitting or insertion of sample data from an external source into a simulation. For instance, in one model I worked with, I used historical pricing data for a product to provide possible prices in my risk-analysis model. This capability provides a powerful tool for forecasting future events based on past outcomes.

@Risk 4.0 comes in three versions: Standard, Professional, and Industrial.

@Risk 4.0 Standard does not include the BestFit application, whereas the @Risk 4.0 Industrial version includes both the BestFit application and an additional component: the RiskOptimizer, which allows for optimizing simulations with genetic algorithms. Past versions of @Risk are also available for the Lotus 1-2-3 spreadsheet application.

Phantom bugs

Some minor display glitches appeared when I viewed multiple windows within the @Risk Results window. However, when I minimized and expanded the windows, these problems disappeared.

Overall, the application performed well, without any major crashes or errors during testing. We tested a very late beta version of the product, so we were happy, but not surprised, to find it in good condition.

Newcomers to the world of risk-analysis software will appreciate the @Risk online manual's thorough treatment of the subject, which included detailed descriptions of the included risk-analysis spreadsheet models.

Data preparation is key

Simply purchasing @Risk and installing it on your PC will not propel you into the world of risk analysis. @Risk requires well thought out and constructed spreadsheet models of real-world events to provide useful data. Without an accurate spreadsheet model, @Risk can return nonsensical results.

If you have no experience creating risk-analysis spreadsheet models, you will need to start with basic models, then increase the complexity as you become more comfortable with @Risk. You will also need some time to become comfortable with the dozen or so buttons @Risk adds into the Excel toolbar.

Business decision-makers looking for spreadsheet-based risk analysis that goes beyond simple best case/worst case scenario models should take a look at @Risk 4.0. This relatively inexpensive piece of software can provide any organization with invaluable insight into the potential risks and rewards of complex business decisions.

Chad Hammond is a professional services manager at LeadTrack Systems, a San Mateo, Calif.-based customer relationship management consulting firm. He can be reached at chad@ltsales.com.


@Risk 4.0 Professional, beta

Business Case: @Risk performs risk analysis on complex spreadsheet models, which yields highly relevant output. Its integration with existing Excel spreadsheets means that current modeling spreadsheets do not have to be re-created.

Technology Case: @Risk's Excel add-in architecture means a small footprint on the desktop and little or no end-user support requirements. Simulations run quickly even on lower-end clients.


+ Tight integration with Excel

+ Extensive list of risk-analysis functions+ High-quality output graphs+ Inexpensive client with no server componentCons:

- Confusing user interface for novice users- Some display glitches when viewing multiple windows in Results screenCost: Professional edition, $695; Standard edition, $495; Industrial edition, $1,195Platform(s): Microsoft Windows 95/98, Windows NT 4.0, Microsoft Excel 7 or laterShipping: Late March 2000Palisade Software Corp., Newfield, N.Y.; (800) 432-7475; www.palisade.com.

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

More about MicrosoftPalisade Software

Show Comments