Simulation Optimization: Applications in Risk Management
Download our report to learn the use of Simulation Optimization as an effective risk mitigation technique.
A Cutting Edge Approach to Managing Risk More Effectively
Risk management is the process that involves identifying, selecting, and implementing measures that can be applied to mitigate the risk in a particular situation. The objective of risk management, in this context, is to find the set of actions to reduce the risk to acceptable levels as defined by the analyst or risk manager. In order to help achieve this objective, many techniques have been developed, both qualitative and quantitative. Among the quantitative techniques, optimization has been at the forefront, having natural appeal as based on a set of objective mathematical formulations for deriving an optimal solution.
In this paper, we describe two prominent optimization techniques that are frequently used in risk management applications for their ability to handle uncertainty in the data, and discuss the advantages and disadvantages of these methods. Next we describe how simulation optimization can overcome the limitations of traditional optimization techniques, and detail some innovative methods that make this a very useful, practical, and intuitive approach for risk management. We conclude by illustrating the advantages of simulation optimization using two practical examples.
Simply complete the form at the top to download our 17-page white paper.
More Optimization White Papers
Tabu Search
Tabu Search, also called Adaptive Memory Programming, is a method for solving challenging optimization problems in the fields of business, engineering, economics and science. Everyday examples include practical applications in resource management, financial and investment planning, healthcare systems, energy and environmental policy, pattern classification, biotechnology and a host of other areas. Tabu search has emerged as one of the leading technologies for handling real-world problems that have proved difficult or impossible to solve with classical procedures.
Optimizing AI/ML Hyperparameters with SimWrapper and OptQuest
Download our report to see how SimWrapper and OptQuest can be used to optimally tune hyperparameters for your AI/ML models.