RISK ASSESSMENT MODEL OF THE INVESTMENT PROJECT WHEN FUZZY INPUT DATA ARE AVAILABLE

A. P. Smirnov () and D. V. Afonina

Russian Journal of Industrial Economics, 2015, issue 3

Abstract: The implementation of any investment project is connected with risk. Many factors considered while estimating the efficiency of an investment project in the future may differ from the assumed plan values measured from the current point of view. Despite fatal information uncertainty, the investors must be able to measure the riskiness of their decisions. The paper presents results of the work aiming to create a model assessing the level of project risk, which is governed not by the character of input data distribution laws, on their mutual dependence, but would take into account the information uncertainty. In addition, the model should give a definite answer about the level of risk of the project when different evaluation criteria are available.It has been shown that the estimation of the investment project efficiency applying the traditional methods of probability theory, cannot lead to a positive decision about investing because the random processes in this sphere do not obey the classical laws. On the other hand there exist the well-known methodology of the theory of fuzzy sets, which by means of expert assessments. more adequately reflects the uncertainty of this kind. The model of risk assessment applies three indicators : the safety ratio, the ratio of covering and the ratio of probability to get into the zone of inefficient investments. Because in this situation the experts have to determine not the specific values of unknown parameters but the balanced range of valuesin question the solution obtained is rather objective and is not difficult to perform. The applied methodology enables to get a positive result for decisions concerning investments.

Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:ach:journl:y:2015:id:224

DOI: 10.17073/2072-1633-2014-3-78-82

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