Quantitative Risk Assessment

Yesterday I attended the Palisade Software Risk Conference in London. While one or two of the presentations were a miss, there were some terrific presentations and conversations with other attendees which were enlightening and inspiring. It had been a while since I used @Risk software in earnest so I thought it was about time to kick the tires again.

I’m organising a golf outing for later this summer. We are certain of the costs (unit and overheads), but are uncertain about how many people will attend. I am assuming 21, but it could be as much as 28 (unlikely) or something less than 21. I’ve assumed here 12 as the minimum.

I know how much the golf rounds cost, how much food costs, the budget for the prizes, etc.

We plan to charge £100, which is £15 more than we normally charge. More than that is considered beyond the market.

How does this look if we model it in @Risk? See the following summary of the computation of surplus income:

The spreadsheet:

Capture

The Output (surplus) shown as a probability distribution:

Capture1

Nice. It tells me we should consider charging more for the event as the current projections show we are unlikely to cover our costs.

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