What does Simulation Risk Modeling Method mean? Read on to discover the definition & meaning of the term Simulation Risk Modeling Method - to help you better understand the language used in insurance policies.
Simulation Risk Modeling Method
A risk modeling method that requires a large number of computer-generated "trials" to approximate an answer. These methods are relatively robust and flexible, can accommodate complex relationships (e.g., so-called path-dependent relationships commonly found in options pricing), and depend less on simplifying assumptions and standardized probability distributions. The principal advantage over analytic methods is the ability to model virtually any real-world situation to a desired degree of precision. Often called Monte Carlo method.
We hope the you have a better understanding of the meaning of Simulation Risk Modeling Method.