Monte Carlo Simulation

Question 1

Monte Carlo

Answer 1

Multiple trial runs using values from defined probability distributions.

(Approximates probabilities of certain outcomes.)

Question 2

Monte Carlo Simulation (general)

Answer 2

Method for performing calculations when you have uncertainty about the input.

Question 3

Point estimates

Answer 3

Single values

Question 4

How do you get probabilistic view of possible outcomes?

Answer 4

Monte Carlo Simulation

Question 5

Monte Carlo simulation allows you to…

Answer 5

Perform accurate forecast in the form of a range

Question 6

Loss event frequency

Answer 6

How many times an event will happen (with most likely value).

Question 7

Loss Magnitude

Answer 7

Value of loss (with most likely value)

Question 8

Loss exceedance curve

Answer 8

Probability of losing a given amount of money or more.

Question 9

Loss events vs. Threat events

Answer 9

Loss events directly result in realized losses.

Threat events against an asset that could result in loss.