Who we are
Strategy@Risk is operated by partners with long experience as CFO, CEO and board members in a range of businesses. As former university employees we can draw on academia when a project demands state of the art knowledge in a field.
Strategy@Risk takes advantage of a program language developed and used for financial risk simulation. We have used the program language for over 25years, and developed a series of simulation models for industry, banks and financial institutions.
The language has as one of its strengths, to be able to solve implicit equations in multiple dimensions. For the specific problems we seek to solve, this is a necessity that provides the necessary degrees of freedom to formulate the approach to problems.
The Strategy@Risk tool has highly advance properties:
- Using models written in dedicated financial simulation language (with code and data separated; see The risk of spreadsheet errors).
- State of the art in financial- and international trade theory.
- Double-entry bookkeeping, using accounts balancing as tool for solving simultaneous equations generating P&L and Balance Sheet.
- Solving implicit systems of equations giving unique WACC calculated for every period ensuring that “Free Cash Flow” always equals “Economic Profit” value.
- Programs and models in “windows end-user” style.
- Extended test for consistency in input, calculations and results.
- Transparent reporting of assumptions and results.
In the Strategy@Risk framework all items, whether from the profit and loss account or from the balance sheet, will have individual probability distributions. These distributions are generated by the combination of distributions from factors of production that define the item.
Variance will increase as we move down the items in the profit and loss account. The message is that even if there is a low variance in the input variables (sales, prices, exchange rates, costs etc.) metrics like Noplat, Free Cash Flow, and Economic Profit and ultimately the Value of Equity will have a much higher variance.
