Towers Perrin-Tillinghast employs a stochastic asset-and-liability management system for helping its pension plan and insurance clients understand the risks and opportunities related to capital market investments and other major decisions. The system has three major components: (1) a stochastic scenario generator (CAP:Link); (2) a nonlinear optimization simulation model (OPT:Link); and (3) a flexible liability- and financial-reporting module (FIN:Link). Each part improves over existing technology as compared with traditional actuarial approaches. The integrated investment system links asset risks to liabilities so that company goals are best achieved. For example, US WEST saved $450 to $1,000 million in opportunity costs in its pension plan by following the advice of the asset-and-liability system.

All four causes of indeterminacy, individually and combined, reduce the precision of prediction.One may raise the question at this point whether predictability in classical mechanics and unpredictability in biology are due to a difference of degree or of kind. There is much to suggest that the difference is, in considerable part, merely a matter of degree. Classical mechanics is, so to speak, at one end of a continuous spectrum, and biology is at the other. Let us take the classical example of the gas laws. Essentially they are only statistically true, but the population of molecules in a gas obeying the gas laws is so enormous that the actions of individual molecules become integrated into a predictable-one might say "absolute"-result. Samples of five or 20 molecules would show definite individuality. The difference in the size of the studied "populations" certainly contributes to the difference between the physical sciences and biology. Conclusions

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