Cost at Risk Analysis

In some applications only or mainly costs of projects are being monitored. These include many public sector projects and services which are not at least fully invoiced to citizens on use basis but rather funded by general budgetary measures.

Costs are typically future uncertain cash flows the evolution of which can be simulated over time. Cash flows can be driven by many types of stochastic processes.  On the basis of such simulations future current values and their paths can be established on different confidence levels. Similarly, net present values of those cash flows and their distributions can be determined and their properties analysed.

All the methods and measures applied in market risk and counterparty credit risk analyses are available for Cost at Risk Analysis.