What is Stochastic Modeling?
Stochastic modeling is a technique of presenting data or predicting outcomes that takes into account a certain degree of randomness, or unpredictability. The insurance industry, for example, depends greatly on stochastic modeling for predicting the future condition of company balance sheets, since these may depend on unpredictable events resulting in the paying of claims. Many other industries and fields of study can benefit from stochastic modeling, such as statistics, stock investing, biology, linguistics, and quantum physics.
