Stochastic Scenario Simulation in Business – Frank Romick / Manfred Stalinger – Book Review

“R”, primarily known as statistics software, in its diversity represents a successful alternative for business Risk Management In order to demonstrate the possibilities of R in the context of risk management, authors Frank Romeike and Manfred Stallinger have authored the book “Stochastic Scenario Simulation in Corporate Practices”. With this, the duo of authors pursue the goal of providing a good mix between an introduction to statistical foundations and practical application in the context of case studies in R. For this purpose, 450 pages are divided into twelve chapters.

Chapter one provides a brief introduction to the book and provides information on how to use R. Additionally, recommendations for reading R are given. Chapter two introduces the fascinating world of chance. In this, the various results of famous mathematicians such as Blaise Pascal, Pierre-Simon Laplace and Johann Karl Friedrich Gauss are presented. Hereinafter, regarding coincidences and coincidences, meaning for Risk Management She described the phenomenon of the black swan. The third chapter creates through definitions of key key terms about opportunities and Risk Management, Descriptive statistics and inferential statistics form the basis for understanding the following chapters. In the fourth chapter, risks and opportunities are described in the form of probability distributions. In particular, the related discrete and continuous distribution functions are introduced in practice. To keep track of distributive functions in R, the relevant example codes for R are included.

This is followed by an insight into the risks in corporate planning and the effects of the measures to be taken in Chapter Five Risk Management. The current situation around the coronavirus is the starting point. For the independent implementation of the examples in this chapter, comprehensive program codes for R are provided. For the sixth chapter, the perspective of stochastic processes has been expanded. This is so Risk Management Necessary if several periods have to be considered. In Chapter Seven he finds an idea related to practice risk– Performance measures are conducted with their statistical calculations. The next chapter 8 deals with modeling of risk dependencies. Here, cause-and-effect relationships are specifically dealt with using correlations and associations and backed up again with examples of R. Chapter 9 provides a process-oriented introduction to sensitivity analysis for Risk Management. This enables a statement about the effect of a single risk on an outcome variable such as the operating result or contribution margin. Sensitivity analysis can be traced using the program codes corresponding to R. Chapter 10 is devoted to optimization of measures for Risk Management.

The previous chapters laid the foundations for Chapter Eleven. In this, practice-oriented case studies are dealt with, in which corresponding scenarios are described. Risky corporate planning, uncertain planning of a multi-stage project, change in raw material prices, investment decision are carried out under uncertainty as well as information security and cyber risk. Program codes corresponding to R are provided for the case studies. The twelfth chapter concludes the book with a brief introduction to R.

conclusion: Frank Romick and Manfred Stallinger aim to provide an action-oriented introduction to R in the context of risk management through their book Stochastic Scenario Simulation in Corporate Practices. The authors manage to do this very well because they provide many aids to implementation in R. It is also positive that the authors focus on the basic statistical principles necessary for Risk Management relevant in practice. Case studies cover practical scenarios that offer a high level of application benefits. The book thus provides a successful introduction to Risk Management With the R program it makes a valuable contribution to the creation of R to implement practical issues in the context of entrepreneurial risk management. So the book can be used by anyone interested in business Risk Management Want to use it, only warmly recommended.