Modeling Risk: Applying Monte Carlo Risk Simulation, Strategic Real Options, Stochastic Forecasting, and Portfolio Optimization, + DVD, 2nd Edition


Praise for Modeling Risk, Second Edition

"Unavoidable for any professional . . . logical, concrete, and conclusive approach."
Jean Louis Vaysse, Vice President of Marketing, Airbus (France)

"A must-have, must-read book with practical applications of risk analysis."
Glenn Kautt, President and Chairman, The Monitor Group, Inc.

"Clear step-by-step approach . . . latest technology in decision making for real-world business."
Dr. Paul W. Finnegan, Vice President, Alexion Pharmaceuticals, Inc.

"A must-read for product portfolio managers . . . captures risk exposure of strategic investments."
Rafael E. Gutierrez, Executive Director of Strategic Marketing and Planning, Seagate Technology LLC

"Clearly organized and tool-supported exploration of real-life business risks, options, and strategy."
Robert Mack, Vice President, Distinguished Analyst, Gartner, Inc.

"Valuable tools for corporations to deliver value to shareholders and society even in rough times."
Dr. Markus Götz Junginger, Lead Partner, Gallup (Germany)

"Powerful toolset for portfolio/program managers to make rational choices among alternatives."
Rear Admiral James Greene (U.S. Navy, Retired), Acquisition Chair, Naval Postgraduate School

"Pragmatic powerful risk techniques, valuable theoretical insights, and analytics useful in any industry."
Dr. Robert S. Finocchiaro, Director, Corporate R&D Services, 3M

"Clear road map and breadth of topics to create dynamic risk-adjusted strategies and options."
Jeffrey A. Clark, Vice President, Strategic Planning, The Timken Company

"Most important risk tools in one volume . . . a definitive source on risk management with vivid examples."
Dr. Ricardo Valerdi, Engineering Systems, Massachusetts Institute of Technology

"Full range of flexible methodologies and applications for quantifying and mitigating risk for effective enterprise risk management."
Raymond Heika, Director, Strategic Planning, Northrop Grumman Corporation

JOHNATHAN MUN, PhD, is the founder and CEO of Real Options Valuation, Inc., and the creator of the Real Options Super Lattice Solver software for real options valuation, Monte Carlo Risk Simulator, and multiple other analytics software tools. Prior to starting his own firm, he was the vice president of analytics at Oracle/Crystal Ball. Mun is also a full professor at the U.S. Naval Postgraduate School (California) and the University of Applied Sciences (Switzerland and Germany). He has authored numerous books, including Real Options Analysis, Real Options Analysis Course, Advanced Analytical Models, Applied Risk Analysis, Modeling Risk, and Valuing Employee Stock Options (all published by Wiley), as well as coauthored The Banker's Handbook on Credit Risk. Mun has also taught and consulted for over 500 corporations in thirty countries worldwide and is considered a leading authority on risk analysis and real options.

What's New in the Second Edition.


About the Author.


PART ONE: Risk Identification.

CHAPTER 1: Moving Beyond Uncertainty.

PART TWO: Risk Evaluation.

CHAPTER 2: From Risk to Riches.

CHAPTER 3: A Guide to Model-Building Etiquette.

PART THREE: Risk Quantification.

CHAPTER 4: On the Shores of Monaco.

CHAPTER 5: Test Driving Risk Simulator.

CHAPTER 6: Pandora's Toolbox.

PART FOUR: Industry Applications.

CHAPTER 7: Extended Business Cases I: Pharmaceutical and Biotech Negotiations, Oil and Gas Exploration, Financial Planning with Simulation, Hospital Risk Management, Risk-Based Executive Compensation Valuation, and Risk-Based Schedule Planning.

PART FIVE: Risk Prediction.

CHAPTER 8: Tomorrow's Forecast Today.

CHAPTER 9: Using the Past to Predict the Future.

PART SIX: Risk Diversification.

CHAPTER 10: The Search for the Optimal Decision.

CHAPTER 11: Optimization Under Uncertainty.

PART SEVEN: Risk Mitigation.

CHAPTER 12: What Is So Real About Real Options, and Why Are They Optional?

CHAPTER 13: The Black Box Made Transparent: Real Options Super Lattice Solver Software.

PART EIGHT: More Industry Applications.

CHAPTER 14: Extended Business Cases II: Real Estate, Banking, Military Strategy, Automotive Aftermarkets, Global Earth Observation Systems, Employee Stock Options, Oil and Gas Royalty Lease Negotiations, Real Options and IT Enterprise Risk Security, Basel II Credit and Market Risk Analysis, and IT Information Security Intrusion Risk Management.

PART NINE: Risk Management.

CHAPTER 15: The Warning Signs.

CHAPTER 16: Changing a Corporate Culture.


Tables You Really Need.

Answers to End of Chapter Questions.

About the DVD-ROM.