Evaluating corporate Risk Management using entropy weight and grey relation analysis

Subject Areas : Financial engineering

Frydoon Rahnamay Roodposhti ¹ , mohammad norouzi ² , hady aminy ³ , Farhad Azizi ⁴

1 - Department of Accounting, Science and Research Branch, Islamic Azad University, Tehran, Iran
2 - Department of Accounting, Faculty of Administrative and Economic Sciences, Gonbadkavus University, Gonbadkavus, Iran
3 - Department of Accounting, Faculty of Administrative and Economic Sciences, Gonbadkavus University, Gonbadkavus, Iran.
4 - Department of Accounting, Qeshm International Campus, Science and Research Branch, Islamic Azad University, Tehran, Iran

Received: 2020-01-18 Accepted : 2020-03-08 Published : 2021-03-21

Keywords: fuzzy logic, risk management, Entropy, gray theory,

Abstract :

Major developments in the business environment, such as globalization and the rapid pace of change in technology, have increased competition and management difficulty in organizations. In complex environments, organizations need managers to consider these inherent complexities when making important decisions. Effective risk management is an important part of this decision-making process. The purpose of the present study is to evaluate corporate risk management by analyzing the relationship between gray matter and entropy weight in listed companies of Tehran Stock Exchange. The sample included 20 companies during the years 2013 to 2018. In this study, we first sought to find relative weight for measuring corporate risk management by using variables (strategic risk management, operational risk management, risk management reporting and risk management non-compliance). Then, based on the results of the entropy analysis, we will try to determine the rankings of the companies in terms of risk management performance using the gray relationship analysis in the companies. The results of this study indicate that many companies have high performance in risk management.