Risk Analysis using Monte Carlo Simulation instead of Scoring and Heat Map

[Darshan_Shetty]

The other day I came across an article that mentioned how the financial industry managed risk using Monte Carlo simulations and the experts in that industry had a disdain for risk assessment done by typical scoring 1-10 likelihood, occurrence and severity method. The argument was that the latter does not have any evidence of being effective, rather it gives a false sense of confidence that risk is being managed appropriately.

I was wondering if anyone in Medical device Industry has ever employed Monte Carlo Simulations for Device Risk Assessment in replacement of Scoring method, or perhaps employed both in some combination.

I have no idea how MCS need to be customized to cater our needs but I love to see an example of this if anyone's made an attempt at it.

 

[John Broomfield]

Darshan,

You may already have seen this:

https://www.thinkmind.org/articles/lifsci_v10_n12_2018_1.pdf

...as these three researchers seem to be leading the way.

 

[Ed Panek]

We use MCTS (Monte Carlo Tree Search) in chess engines. The network is not human-readable but it contains a variable for value (the expected score of a choice) and policy (how often that choice has been visited). [R] Monte-Carlo Tree Search as Regularized Policy Optimization : MachineLearning (reddit.com)

If you have specific questions join us here and ask the experts.

#general (discord.com)

 

[d_addams]

imo the reason financial institutions would do this is because of a scaling issue of the size of the loss or probability of the event. Some exotic derivatives bets can blow up pretty spectacularly and using a 5-point scale probably doesn't appropriately separate the risk of looking 20 billion dollars or 20 trillion dollars if a trade goes bad. Or if their scale did capture this it would make all the potential 100 million losses look insignificant.

Darshan,

You may already have seen this:

https://www.thinkmind.org/articles/lifsci_v10_n12_2018_1.pdf

...as these three researchers seem to be leading the way.

Darshan, this is an example of enterprise risk management, not device risk management.