Stochastic modelling

What is Stochastic modelling?

Stochastic modelling meaning Statistical technique used in asset/liability modelling to estimate the probability of certain events occurring. It does this by simulating many possible outcomes for the factors affecting the assets and liabilities of the investor. A large number of outcomes are generated in order to derive a mean expected outcome and a statistical distribution of outcomes. (See also asset/ liability modelling.)

 

reference: mercer.com