simulation risk modeling method (often called Monte Carlo 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.