Application of Fuzzy TOPSIS for group decision making in evaluating financial risk management

Abstract

The importance of risk management has become a vital topic for finical institutions. Effective financial risk management (FRM), as the part of financial system, has strong impact on the performance of the enterprise. In this study, two methods are used. First, Entropy and Analytic Hierarchy Process (AHP) method for setting the weights for financial risk management dimension criteria. Second, Technique for Order Preference by Similarity to Ideal Solution (TOPSIS) was applied to assess financial risk management relative performance viewed by different group of experts. We also applied Fuzzy TOPSIS for group decision making to evaluate the rating of response alternatives. The introduced procedure can help us finding the improvement directions and efficient resource allocation for financial risk management.