Qualitative And Quantitative Methods Of Risk Analysis Finance Essay


Kerzner ( 2009 ) defined Risk in undertaking direction as a step of the profitableness and effect of non accomplishing a defined undertaking end. Hazards can happen at any point of a undertaking. In order to avoid these hazards or cut down the impact of the hazards on the undertaking, an effectual program must be put in topographic point. Methods and techniques could besides be adopted to cut down and avoid the impact of the hazard involved.

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Hazard Analysis can be divided into two: Qualitative Analysis and Quantitative Analysis

Quantitative Risk Analysis involves trying to numerically measure the chance and impact of the identified hazard. It besides provides an overall hazard mark for the undertaking while using different tools and techniques to accomplish and carry through its aim ( Phillips 2007 ) .

Quantitative hazard appraisal ( QRA ) is a technique that can be used to assist accomplish this balance. In the UK and Norway, the usage of hazard appraisal is a legislative demand for all new and existing installings, and several other states are implementing similar ordinances. As a consequence, QRA is now being used world-wide by interior decorators, operators, and advisers in the offshore industry.

Probabilistic Simulation is a technique and method used in the Quantitative analysis of hazard. Simulation can be defined as an experiment carried out over the system of involvement ( Panneerselvam and Senthilkumar 2009 ) . Probability stimulation is the procedure of explicitly stand foring uncertainnesss and hazards by stipulating inputs such as chance distribution ( www.goldsim.com )

The Goldsim Simulation package was discovered and developed by the Goldsim engineering group. It is a powerful and flexible window- based computing machine plan for presenting probabilistic distributions of complex environments to back up the direction of hazard in different companies and sectors. It creates a platform for visualizing and imitating about any sort of physical, fiscal or organizational system. The Goldsim depicts a ocular spreadsheet that enables the user to visually bring forth and pull strings informations. ( www.goldsim.com ) . this is depicted in the figure below.

The figure above shows an illustration of the Goldsim Software and how it creates theoretical accounts by pull stringsing graphical objects and images.

Oil and Gas undertakings are normally subjected to and affected by external hazards of the undertaking environment. The most well-known hazard which affects oil and gas geographic expedition undertakings is economic hazard. A complete proper economic analysis of a known belongings outputs different investing indices. The bests of them must fulfill the 3H regulation, i.e. , they must reply all three inquiries: How much return may be expected? How much capital is required? How long does the E & A ; P procedure last? ( Komlosi 1999 ) .

Therefore this survey will follow and associate the Goldsim package to cut downing the hazards involved in geographic expedition oil and gas undertakings.


It is non far from the truth to province that the impact of economic hazards involved in oil and gas geographic expedition undertakings has been of huge importance to the industry.

Komlosi ( 1999 ) stated that the Monte Carlo Simulation in the instance of an unknown activity as geographic expedition undertakings provides the most sophisticated solution ciphering chance distribution. However this survey will follow the Goldsim Simulation because even though similar to the Monte Carlo Simulation, its uniqueness prevarications in the usage of graphical objects which depicts more lucidity in presentations to stakeholders and the undertaking patron. This survey will compare the Monte Carlo method with the Goldsim Simulation method and warrant the acceptance of the latter.

The hazards involved in geographic expedition undertakings are normally geological and economic hazards. Geological because when Wellss have non been drilled, there is small information about the degree of oil nowadays ( Lasdon et al 2007 ) . Due to this geological hazard s which in bend leads to economic hazard, a thorough and elaborate hazard analysis has to be carried out in order to cut down or forestall the impact of the hazard. Therefore this survey will wish to associate and follow the Goldsim simulation package as a agency to turn toing and analyzing these hazards.

Problem Statement

Offshore production of oil and gas involves some of the most ambitious technology undertakings of the modern universe, and is a premier beginning of gross for many companies and states. It besides involves hazards of major accidents, which have been demonstrated by catastrophes such as the detonation and fire on the UK production platform Piper Alpha, the capsizes of the Norse adjustment platform Alexander Kielland and the Canadian semi-submersible boring rig Ocean Ranger, and the sinking of the Norse gravitation base construction Sleipner

Major accidents represent the ultimate, most black manner in which an offshore technology undertaking can travel incorrect. Accidents cause decease, agony, pollution of the environment and break of concern. Being so dramatic, they attract attending from the intelligence media and linger in the public memory, doing concern about safety offshore. Are offshore platforms safe plenty? Can major accidents be prevented? How should the offshore industry achieve an appropriate balance between the involvements of safety and the economic sciences of oil and gas production?

Study Aim and Aims

1.4.1 Study Aim

The purpose of this undertaking is to set up the Goldsim Simulation tool as a agency of turn toing and cut downing the Hazard involved in Oil and Gas Exploration undertakings. This survey will measure its effectivity and impact on oil and gas undertakings refering to the geographic expedition sector.

1.4.2 Study Aims

The purpose of the undertaking discussed above will be achieved through run intoing the undermentioned aims:

To Supply a Background description of the Goldsim Simulation package

To compare and contrast the Goldsim Simulation package with the Monte Carlo Simulation

To supply a brief overview of hazard and hazard direction

To place the Risks that are associated with Oil and Gas Exploration Projects.

To place the different types of hazard appraisal methods and buttress on the techniques related to the Quantitative method.

To find how the Goldsim Simulation package can be used as a agency for cut downing the hazard involved in Oil and Gas Exploration Projects.

Project Scope and Deliverables

The range of this undertaking is to associate and find how probabilistic simulation as a tool could be used for turn toing hazard and uncertainness in Oil and Gas geographic expedition undertakings.

1.5.1 Scope Exclusion

The survey will non transport out the followers:

Undertaking of the Primary research.

Execution of the proposed research.

1.5.2 Undertaking Deliverables

Undertaking Deliverables are defined as the peculiar activities and end products produced to accomplish the aims of the Project ( Cobb 2006 ) .

The chief deliverable for the survey is the concluding undertaking proposal. However the tabular array below provides a list of the expected deliverables for the undertaking.



Expected day of the month

Project Research Plan

Typed Document ( Ms Word )


Literature Review

Typed Document ( Ms Word )


Research Methodology

Typed Document ( Ms Word )


Findingss, Conclusion and Recommendation

Typed Document ( Ms Word )


Undertaking Plan

1.6.1 Work Breakdown construction

The Work Breakdown construction can be defined as an instrument which identifies all of the undertakings in a undertaking. In fact a WBS is sometimes referred to as a Task List. It converts a undertaking into little intangible undertakings ( Verzuah 2008 ) . The Work dislocation construction acts as a vehicle for interrupting the undertaking work down into smaller elements ; therefore supplying a greater chance that every major and minor activity will be accounted for. ( Lock 2007 )

The work interrupt down construction below shows and depicts the overall program for the undertaking.

1.5.2 Undertaking Agenda

Undertaking agenda is besides known as the timetable for a undertaking. “ It shows how the undertaking activities and mileposts are planned over a period of clip ” . ( APMBOK 2006, pg 152 ) The agenda tabular array is shown below and is besides represented in a Gantt chart, demoing the activities carried-out. Effort has been made to maintain to the agenda highlighted below.

Work Breakdown Structure ( WBS )

Duration ( Days )

Overall Undertaking

93 yearss


16 yearss

Prepare Proposal

7 yearss

Supervisor Review

3 yearss

Concluding version

4 yearss

Proposal Acceptance

2 yearss


29 yearss

Literature Review

20 yearss


2 yearss

Supervisor Review

5 yearss

Review Acceptance

2 yearss

Research Methodology

21 yearss

Preparation of Methodology

10 yearss

Evaluation of Methodology

3 yearss

Final Result of methodological analysis

4 yearss

Datas Analysis

4 yearss

Final Proposal

24 yearss

Analysis of Findingss

12 yearss

Review of Report

4 yearss

Decision and Recommendation

6 yearss

Final Project Research

2 yearss

Near Out

3 yearss

Concluding Hand over

3 yearss

1.6.3 Gantt chart

The Gantt chart is an act of exposing simple activities or events plotted against clip ( Kezner 2009 ) . Gantt charts are besides known as saloon charts and are named after the American Industrial applied scientist Henry Gantt ( 1861-1919 ) . Lock ( 2007 ) stated that Gantt charts are ever drawn to a additive clip graduated table and that their efficiency and effectivity can be elevated through the usage of different colorss.

The Gantt chart below shows the major undertakings associated with the undertaking in inquiry

Chapters Summary

This study is presented in four chapters with each chapter divided into subdivisions that discuss separate issues demonstrated in the chapter. Chapter one commences with the debut which depicts a background and rational for the undertaking context. This is followed by the aims and range of the research survey. Six aims have been identified in this chapter that will enable the purpose of the survey to be achieved. The Literature reappraisal provides critical analysis on published information that is applicable to the research subject, with treatment concentrating on the countries identified in the purposes and aims discussed supra. This information was so used to determine the informations aggregation methods which are described in the methodological analysis subdivision. Chapter three identifies the research methodological analysis that will be used to prove the research inquiry. Different types of research methods used in the research were identified and analysis of the primary informations is proposed, with mention where appropriate to the secondary grounds discussed in the literature reappraisal. This information is so collated in the decision.

Chapter four discuses the findings based on literature that presents answer to the research inquiries. Finally, this information is so collated in the decision subdivision, and used to show a set of recommendations ensuing from the survey and for farther surveies on the subject in inquiry.

Chapter Two

Literature Review

2.0 Introduction

A Literature reappraisal can be defined as

“ aˆ¦ a reappraisal which reveals conceptual penetrations into the job and besides in bend provides the footing for hypothesis in the research workers ain studyaˆ¦ ( Ethridge 2004:115 )

This chapter will travel into deepness of the undertaking subject and stress on the authors and subjects associated with the survey and capable affair.

In order to continue, the survey will foremost and first turn to the industry in inquiry and place the jobs which need to be rectified and mitigated.

2.1 Undertaking Risk and Risk Management

2.1.1 Undertaking Hazard

A brief debut and outline of hazards involved in the survey may be indispensable in order to put into perspective the aims discussed earlier in chapter one.

Hazard “ is the exposure to the effects of uncertainness ” ( Cooper et Al 2005, p.3 ) . Bartlett ( 2004 ) supports this by specifying hazard as the exposure of stakeholders to the effects of fluctuations in result and is dependent on the accretion of a figure of single hazard events, together with other beginnings of uncertainness to the undertaking as a whole such as variableness and ambiguity. Undertaking Hazard can be defined as unsought events which may ensue in holds, inordinate disbursement, unsatisfactory undertaking consequences, safety and environmental jeopardies and besides entire failure. Undertakings hazards may come from the undertaking itself, which can be characterised by uncertainness, complexness and urgency, or organize deficiency of resources or other restraints ( Aaron et al 2002 ) . Kerzner, ( 2009 ) defines a hazard as a step of the profitableness and effect of non accomplishing a defined undertaking end. It is besides defined as a grade of uncertainness. Hazards can happen at any portion of the undertaking. A hazard activity or event that occurs at the decision of the undertaking will be more dearly-won in footings of the budget and clip than a similar event nearer the start of the undertaking ( Lock, 2003 ) . Risks arise as a consequence of uncertainnesss in a undertaking. Risk is an unsure event that if it occurs has a positive/negative impact either clip, cost, range or quality which are the undertakings aims ( Perminova et al 2007 ) . Nickolas, J and Steyn, H ( 2008 ) supports this definition by specifying hazard as a joint map of the likeliness that some debatable event will happen and the impact of the event if it does happen. Thompson ( 1991 ) and Kerzner ( 2009 ) claims that the success or failure of the undertaking depends mostly on the designation, understanding and direction of uncertainnesss. A Harmonizing to Hillson ( 2009 ) different undertakings are exposed to different degree of hazard, so each measure in the undertaking hazard direction procedure must be scale able to run into the changing grade of hazard challenge.A In support of the above research, Ward and Chapman ( 1995 ) identifies the similarities of hazards involved in sensitive undertakings with a defined degree of complexness saying a generic hazard happening format in undertakings.

Risks consists of two primary constituents for a given activity

The chance of happening of that activity

Impact of the event taking topographic point

There are two types of Hazard ; viz. : Internal Hazards and External hazards. Internal hazards are hazards which may be within the control of the undertaking director, but present uncertainness that may impact the continuance of the undertaking. Examples of such include Technological, Human factor/ organizational hazards, Procurement hazards. External hazards are hazards which are outside the undertaking director ‘s control, but may impact the continuance of the undertaking. Examples include Economic and Financial hazards, Environmental, Legal and Regulatory Risks, Political Risks, Security Risks ( Lock 2003 )

This survey will buttress on the hazards which affect oil and gas geographic expedition undertakings. These hazards include Economic hazards, Geographical hazards and environmental hazards ( Motta et al 2000 ) . Jessen ( 2009 ) besides states that Financial, regulative and operational hazards have been the chief focal point of the oil and gas companies in recent times. However in the class of analyzing these houses and companies discovered hazards such as Human capital definition, cost controls, clime conditions, etc. This is depicted in the diagram below. The figure below shows about 10 different hazards which could move as a menace and impact the sustainability of Oil and Gas Companies, houses or even the industry as a whole.

Figure 2: Menaces identified ( adapted from Top 10 Hazards for the Oil and Gas Industry )

2.1.2 Undertaking Risk Management

Risk Management as defined by Young ( 2007 ) is a uninterrupted procedure throughout the lifecycle of a undertaking and the undertaking director must keep consciousness of hazard in the heads of all the members of the undertaking stakeholders and squad. Risk direction, harmonizing to Kerzner ( 2008 ) has to make with hazard planning, hazard appraisal, hazard extenuation and hazard monitoring. Since hazards occur during the life stages of the undertaking, hazard direction is a ne’er stoping exercising ( Lock 2007 ) . Maylor ( 2003 ) further stated that the activity of hazard direction can be grouped into three chief countries ; designation, quantification and response control or extenuation. On the other manus Royer ( 2002 ) categorises the procedure of hazard direction into the undertaking life rhythm as follows ; Project chance appraisal, be aftering stage involves risk direction planning, Execution stage involves undertaking hazard audit, Controling stage involves go oning hazard direction, Closure stage involves hazard cognition transportation. Edwards and Bower ( 2005 ) supports this position by farther stating that life rhythm application stages can be adopted as another attack to categorising hazard. He goes on to contend that classification and categorization attack serves as a clear focal point for the clip constituent of hazard. Lock ( 2003 ) states that hazard designation is an effectual technique and tool for placing the hazards in an industry such as brainstorming. This can be achieved by the cardinal staff of a peculiar company or undertaking carry oning a brainstorming meeting in order to place all the possible hazards along with many of the unlikely 1s. However this survey will non buttress on the designation of hazards in the industry in inquiry, but on the analysis and quantification of the hazards identified.

Hazard analysis as defined by APM ( 2000 ) is a procedure which when undertaken will increase the likeliness of the successful completion of a undertaking to be, clip and public presentation. Bartlett ( 2004 ) besides contributed to this school of thought by specifying the analysis of hazard as a tool to help in altering undertaking duties efficaciously and in guaranting the fulfillment of undertaking aims. It besides involves the estimating of the chance of happening and effect and change overing the consequences to a corresponding hazard degree ( Kerzner 2009 ) . While the appraisal of hazards AIDSs in the successful completion of a undertaking it besides helps to pull off the hazard involved by cut downing, avoiding and accepting the hazard involved ( Consuming and Vendon 1998 ) .

2.2 Methods and Techniques in Risk Analysis

Hazard Analysis can be divided into two:

Qualitative Analysis

Quantitative Analysis

Qualitative Analysis: this can be defined as the assignment of evaluations to each hazard identified and involves the puting out of possible menaces and their results through brainstorming and developing steps to extenuate these hazards ( Harris 2002 ) .

However this survey will merely concern itself with the Quantitative Risk analysis method or attack. The Quantitative hazard appraisal method can be defined as a method which involves trying to numerically measure the chance and impact of the identified hazard. It besides provides an overall hazard mark for the undertaking while using different tools and techniques to accomplish and carry through its aim ( Phillips 2007 ) . Quantitative hazard analysis is more focussed on the execution of safety steps that have been established, in order to protect against every defined hazard. By utilizing a quantitative attack, an organisation is able to bring forth a really precise analytical reading that can clearly stand for which risk-resolving steps have been most well-suited to assorted undertaking demands. This makes the quantitative attack favoured by many direction squads since hazard appraisals can be clearly and obviously represented in the empirical signifiers like per centums or chance charts, since it emphasizes utilizing tools such as prosodies ( www.brighthub.com ) . On the other manus Galway ( 2004 ) had a position that the techniques of hazard analysis recommended by the pedagogical literature are the stochastic Critical Path Method ( CPM ) for agenda hazard, and a stochastic simulation of costs from the Work Breakdown Structure ( WBS ) and that both methods require a specification of uncertainness for clip and cost for undertakings to finish. He goes on to province that the after carry oning some theoretical and practical research on the perceptual experience of quantitative undertaking hazard analysis, what was deduced is that the general public-service corporation of quantitative undertaking hazard analysis was that it is clearly utile for the ground that it is so widely used and so widely recommended. In Galway ( 2004 ) position, quantitative hazard analysis could be sub divided into three entities ; the analysis of agenda hazard, cost hazard and public presentation hazard.

As stated earlier, hazards can either be internal or external to the undertaking involved. The internal hazards are hazards that are associated with the undertaking itself, the people and squad involved and the administration ( Barkley 2004 ) . However external hazards are the antonym of internal hazards. They are hazards that are non straight linked or related to the undertaking in inquiry, but have a likely consequence on the result of the undertaking ( Nicholas 2004 ) . In other words internal hazards could be managed or mitigated easier than external hazards. External hazards are harder to extenuate and pull off because the environment in which the hazards are situated demand to be understood. The institute of Risk Management ( 2002 ) added to this theory by saying that the hazards confronting an administration and its day-to-day operations can ensue from factors both internal and external to an administration. IRM categorises these types of hazards into the followers:

Strategic hazard

Fiscal hazard

Operational hazard

Hazard hazard

As seen in the diagram below some hazards can hold both external and internal drivers and overlap the two countries.

Heldman ( 2009 ) categorises external hazards as follows:

Laws and Regulations

Labour issues


Changes in convergence and foreign policy of undertakings performed in other states

Force Majeure

The JISC hazard direction info-kit classified external hazards into the followers:

A alteration in authorities

A alteration in the support theoretical account

New statute law e.g. associating to Data Protection, Freedom of Information, Disability, Health and Safety

A alteration in the market for peculiar topics

Economic recession in a state

A rival merges with another establishment or changes its class portfolio

A major system provider goes out of concern

In relation to the above school of ideas, the three basic types of hazards for oil and gas undertakings are market hazard, state or Political hazard and concern hazard. While the former and latter should be evaluated at the same time, the state hazard is applied with a particular chance cost ( price reduction rate ) ( Komolosi 2001 )

2.2.1 Techniques in Quantitative Risk Analysis

APM ( 2000 ) identifies five chief techniques for quantitatively analyzing hazard in undertakings. They are:

Sensitivity Analysis

Probabilistic analysis

Influence Diagrams

Decision Trees

This survey will concern itself with the Probabilistic analysis technique as this is related to the concluding purpose of the undertaking.

Probabilistic analysis technique is a quantitative method which specifies a chance distribution for each hazard and so considers the consequence of each hazards in combination. This is the most common method of executing a quantitative hazard a analysis. The most common type of probabilistic analysis uses the Monte Carlo simulation technique ( APM 2000 ) .

2.3 Simulation and the Monte Carlo Simulation Technique

2.3.1 Simulation

“ aˆ¦aˆ¦.Simulation is the imitation of the operation of a existent universe procedure or system overtime. Simulation involves the coevals of an unreal history of the system and the observation of that unreal history to pull illations refering the operating features of the existent system that is representedaˆ¦ ” ( Banks 1998: p.3 ) .

He goes on to province that simulation is used o describe and analyse the labor of a system, inquire what if inquiries about the existent system and besides in the design of the existent system. Kleijnen ( 2007 ) buttresses on the nature of the theoretical account by specifying a simulation theoretical account as a dynamic theoretical account that is meant to be solved by agencies of experimentation. This position is elaborated on by Andrewlife et Al ( 1990 ) by specifying simulation as a dynamic and ongoing system that is represented by elements in order to enable the reproduction of specific facets of the behavior of the system.

As pointed out by Mcleish ( 2005 ) the best and the most of import modern system tool for analysing the hazard of a undertaking or system is simulation and that simulation is the imitation of a existent universe procedure or system. It is basically a mathematical theoretical account of a procedure.

There are different types of simulation in the direction of hazard. However the type of simulation which will be adopted for this survey is Monte Carlo Simulation.

2.3.2 Monte Carlo Simulation

“ aˆ¦..Monte Carlo simulation is a statistics-based analysis tool that yields probability-vs.-value relationships for cardinal parametric quantities, including oil and gas militias, capital exposure, and assorted economic yardsticks, such as net present value ( NPV ) and return on investing ( ROI ) ” aˆ¦ … ( Murtha 1997 ) .

Monte Carlo simulation is a tool that aids in the modeling of uncertainnesss behind production and prognosis. Monte Carlo simulation analysis depicts non merely whether an investing will be selected, but how likely the investings will be profitable and how profitable it is likely to be ( www.financeisland.com )

As seen in the figure above the NPV analysis provides limited information as it merely informs the undertaking director the net present value of the activity. However following the Monte Carlo Simulation as a tool will supply non merely the net present value or viability of that undertaking but besides how likely the investings will be profitable and how profitable it is likely to be.

Finch et Al ( 2001 ) postulated that Monte Carlo simulations combine assorted sorts of cognition, held chiefly by those with legion professional backgrounds, normally within an oil company, but besides affecting members of other oil companies if chances are enhanced in partnership, or services companies if contracted to transport out facets of proficient assessments. in general, the simulations involve the undermentioned five processs:

( 1 ) The chance ‘s expected volumes are assessed by pulling illations from historical geological records and from other geological scenes that are deemed to be similar.

( 2 ) The procedure of geological illation is reflected in fluctuations across distributions of values of geological variables for the intents of Monte Carlo simulation.

( 3 ) Monte Carlo simulation provides a chance distribution of a chance expected hydrocarbon volume, and some determinate points from this distribution, conventionally at 10, 50 and 90 % chances, are selected.

( 4 ) Hydrocarbon volumes matching with the 10, 50 and 90 % chances are capable to dismiss hard currency flow modeling and net nowadays values for each sample point are calculated.

( 5 ) The net nowadays values of each sample point are reassessed into a determination tree and a individual expected pecuniary value for the chance is presented.

Saibi ( 2007 ) on the other manus stated that the Monte Carlo simulation is applied in two different stairss and processs ; the first is to calculate the realistic clip result for each subdivision. The 2nd is to calculate or foretell the possible cost consequence for each subdivision.

2.4 Advantages and Disadvantages of the Monte Carlo Technique

The Monte Carlo Simulation technique has both benefits and restrictions. This is depicted in the tabular array below



Very flexible: there is no bound to the analysis empirical distributions can be handled.

It could be expensive and consumes much computing machine clip.

It can by and large be easy extended and developed as required.

Whenever the premises are changed, a wholly new simulation has to be done.

Easily understood by non-mathematicians.

Solutions are non exact, but depend on the figure of perennial tallies used to bring forth the end product statistics

It allows the Analyst to find estimations of coveted measures that would be impossible or highly hard to find by theory.

Calculations can take a long clip.

By using the simulation method, it can find which features or constituents are most of import to the system.

In this simulation technique, theoretical account inputs do non hold to follow a specific statistical map.

( Applied R & A ; M Manual for Defence Systems ; Seppella, 2008 )

A major restriction as buttressed by Longman ( 2007 ) of the Monte Carlo method is that it is innately incompatible with basic hazard direction rules.

2.5 The Goldsim Simulation Technique vs. the Monte Carlo Simulation Technique

The GoldSim simulation package is ‘a powerful and flexible platform for visualising and dynamically imitating about any sort of physical, fiscal or organisational system. You build a theoretical account in an intuitive mode by literally pulling a image ( an influence diagram ) of your system. In a sense, GoldSim is like a “ ocular spreadsheet ” that allows you to graphically create and pull strings informations and equations ‘ ( hypertext transfer protocol: //www.goldsim.com/Content.asp? PageID=82 # ) .

Table? below comparisons and contrasts both the Goldsim simulation technique and the Monte Carlo simulation method.

Monte Carlo Simulation

Goldsim Simulation

It can be easy developed as required.

Can be easy extended and developed when required.

Very flexible.

Very flexible.

It is a powerful and flexible window- based computing machine plan for presenting probabilistic distributions of complex environments to back up the direction of hazard in different companies and sectors.

It is a statistics-based analysis tool that yields probability-vs.-value relationships for cardinal parametric quantities, including oil and gas militias, capital exposure, and assorted economic yardsticks.

It is a tool that aids in the modeling of uncertainnesss behind production and prognosis.

Is besides a technique, which helps in the modeling of hazards associating to production and other sectors.

Involves the usage of computing machines and could be complex in footings of apprehension.

Involve the usage of computing machines but besides involves the acceptance of images to imitate in order to cut down complexness and increase apprehension.

Calculations could take a long clip.

Calculations take a shorter clip.

Address the uncertainness that is present in systems.

Quantitatively solves the menaces that are present in existent universe systems.

Beginning: ( Applied R & A ; M Manual for Defence Systems ; Seppella, 2008 ; www.goldsim.com )

After comparing and contrasting the Monte Carlo Simulation method and the Goldsim simulation technique, it can be seen from the tabular array above that both methods have a batch of similarities in their methods of turn toing hazard. However it can besides be deduced from the tabular array that the Goldsim method provides a more apprehension of the concluding consequences as it gives the translator a good apprehension by the usage of images ( www.goldsim.com ) .

Therefore it can be concluded that the Goldsim simulation package or method can be adopted and used as a technique for turn toing hazard in oil and gas undertakings.

2.6 Chapter Summary

Hazard is inevitable in undertakings, particularly in oil and gas undertakings. There are assorted types of methods used to turn to and analyze these hazards associated with the undertakings. The chapter buttressed on the quantitative facets of hazard appraisal and besides on the probabilistic simulation methods. A description of the Monte Carlo simulation was illustrated and compared to the Goldsim simulation technique. After comparing and contrasting both techniques, it was deduced that the Goldsim technique can besides be used and adopted in the addressing of hazard in Oil and Gas undertakings.


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