Defence of the Monte Carlo simulation

Monte Carlo simulation, or probability simulation, is a technique used to understand the impact of risk and uncertainty in financial, project management, cost, and other forecasting models.

When you develop a forecasting model – any model that plans ahead for the future – you make certain assumptions. These might be assumptions about the investment return on a portfolio, the cost of a construction project, or how long it will take to complete a certain task.

With the market collapse of 2008, however, many people who relied on these simulations, and thought they were safe, found themselves in trouble according to CBS news. Indeed, Monte Carlo simulations have been attacked widely.

In this talk, Nira Chamberlain – a mathematical modelling expert will address the flaws but will, as the title has stated – defend the Monte Carlo Simulation.

This talk is aimed at project managers and other practitioners of the Monte-Carlo method who may or may not be aware of the assumptions that underpin this established technique.

Nira Chamberlain is a member of the Council of the Institute of Mathematics and its Applications, and has over 20 years experience working as a professional mathematical modeller and currently leads the modelling and simulation capability of the LSC Group. Nira Chamberlain’s speciality is developing bespoke engineering affordability models for large and complex engineering projects.