Welcome to ProbabilityManagement.org
a standards setting organization devoted to establishing
A New Calculus for Uncertainty and Risk
Two recent technologies, Interactive Simulation and Distribution Strings, make probabilistic models Auditable, Coherent, and Transparent.
A Probabilistic models have traditionally been difficult to Audit. The DIST™ Distribution String encapsulates thousands of Monte Carlo trials into a single XML string, which may be maintained in a spreadsheet or data base, and audited according to current business practices.
C Most representations of uncertain quantities cannot be easily added together. DISTs allow Coherent sub-models to be aggregated directly into enterprise or industry wide models that recognize and consolidate systemic risk.
T Probabilistic models are difficult to interpret. Transparent results can be achieved through intuitive graphical interfaces driven by interactive simulation.
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Toward a Consolidated Risk Statement
Toward a Consolidated Risk Statement, an article by Sam Savage and Aaron Brown, appears in the December issue of Risk Professional magazine. (Subscribers to the magazine may view it at their site.) It describes the potential of the DIST format to enable the aggregation of risk reports across an organization. A companion Excel model is now available on the Interactive Modeling page of this site.
The Flaw of Averages
The Flaw of Averages: Why we Underestimate Risk in the Face of Uncertainty, by Dr. Sam Savage, has recently been published by John Wiley and Sons and is available at amazon.com. It describes the basic principles of Probability Management, and the origin of the DIST data type. Examples from the book and other related materials can be found at flawofaverages.com.
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