A model is a spreadsheet that has moved from being a data organizer to an analysis tool. A model represents the relationships between input and output variables using functions, formulas, and data. As the model expands, it more closely matches the behavior of a real-world scenario.
Crystal Ball works with spreadsheet models created in Microsoft Excel and compatible Oracle applications, such as Smart View, to help you identify and quantify risk and the probability of success.
Risk is usually associated with uncertainty, where risk includes the possibility of an undesirable event coupled with severity. It is important to identify risks and to determine how significant they are.
After you identify risks, a model can help you quantify them. Quantifying a risk means determining the chances that the risk will occur and the cost if it does, to help you decide whether a risk is worth taking. For example, if there is a 25% chance of running over schedule, costing you $100, that may be a risk you are willing to take. But if you have a 5% chance of running over schedule, knowing that there is a $10,000 penalty, you may be less willing to take that risk.
Finding the certainty of achieving a particular result is often the goal of model analysis. Risk analysis takes a model and sees what effect changing different values has on the bottom line. Risk analysis can: