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Stochastic modelling

E

Erica Glasman

Member
On chapter 28 (Risk measurement and reporting) it states the following related to Stochastic modelling scope limit: "Carry out a number of runs with a different single stochastic variable, followed by a single deterministic run using all the worst-case scenarios together. This will determine the effect of interactions between the various variables."

Could you please explain why this will "determine the effect of interactions between the variables"?
 
Hi Erica

I think this is best thought of as the single run helping us understand the impact of changing many of the assumptions at the same time, to fully understand te effect of the interactions we would need to do more runs.
 
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