Stochastic Modelling (insurance) - Numerical Evaluations of Quantities

Numerical Evaluations of Quantities

Stochastic models help to assess the interactions between variables, and are useful tools to numerically evaluate quantities, as they are usually implemented using Monte Carlo simulation techniques (see Monte Carlo method). While there is an advantage here, in estimating quantities that would otherwise be difficult to obtain using analytical methods, a disadvantage is that such methods are limited by computing resources as well as simulation error. Below are some examples:

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