Briefly

The workshop covers the concepts of risk and uncertainty in an investment setting and the conversion of those concepts into quantifiable format for use in Excel. Basic numeric descriptors of uncertainty and Excel's functions are used to develop numeric investment appraisals. Application tools such as Scenario and Sensitivity analysis, Pay-off tables and Decision Trees are developed in this workshop. Providing a substantial basis for the introduction of uncertainty, this workshop includes many probability measures used in simulation and asset value risk measurement. It is a workshop for those who are uncertain about uncertainty and want to incorporate risk assessment into their solutions.

Detailed Outline - A full one day workshop

For Whom:
Non-financial professionals wanting to use or build investment assessment models and needing a clear understanding of principles and practices applicable to any financial high risk business environment.

Assumed expertise:
Applicants should be competent in Excel with a good understanding of functions and arguments. An understanding of basic NPV concepts (not necessarily Excel's functions) is assumed. (Discounted cash flow concepts including Net Present Value (NPV) and Internal Rate of Return (IRR) and other time value of money concepts are covered in the workshop DCF and Resource Investment.

Content:
-An introduction to risk and uncertainty as concepts.

-Using Excel's random generator features within the context of an uncertain environment.

-Examination of the basic quantitative descriptors of uncertainty and probability, including Excel functions.

-Excel's functions for measures of dispersion, and the common distributions representing uncertainty and risk in the financial world.

-Worst, Best and Most Likely models as an introduction to incorporating probability into project analysis. Uses Excel's Scenario Manager.

-Sensitivity Analysis - establishing the critical variables and their effect on outcomes - reporting on the criticality of variables.

-A brief look at Risk Adjusted Discount Rates (RADR) and Certainty Equivalence (CE) focuses the workshop on questionable solutions to future uncertainty.

-Pay-off Tables begin by looking at single decision point tables and establishing EMVs (Expected Monetary Values). Concepts of Max Gain/ Min Loss are built into the main Excel example.

-The conventions of Decision Tree structure and the calculation of Node values using back induction are used as an introduction to both single and double decision node example.