Fuzzy model for risk analysis

Author

Professor, Academy of Economic Studies from Bucharest, Romania

Abstract

The goal of this paper is to show how the concept of fuzzy logic can be used to establish a degree to which an investment project belongs to a class of risk. Also, the probability of the fuzzy event is presented and is ap-plied to calculate the probability of the fuzzy event “the project X is a good investment”. This process has to enable the decision maker to compare several alternative investments from the fuzzy logic perspective and, in this way, allows him to include the uncertainty that comes with the problem in reality. Moreover, by experi-ments with the proposed fuzzy model the user can obtain new knowledge for investment risk analysis.

Keywords