The fuzzy logic system for risk level assessment

A company needs to face different kinds of risk. They are often difficult to assess and manage since the decision makers cannot evaluate the risks in a systematic, orderly manner. A direct or indirect loss will be suffered as a result. Using an express delivery service company as an illustrative example, this study proposes a fuzzy logic approach to assess the company's risk level. It demonstrates how to assess the risk level by a risk factor. This risk factor is evaluated with fuzzy values in terms of the likelihood of occurrence and of the severity of the consequence. The output of the risk assessment system is the risk level of the risk factor given by the rule-base. By having an indication of the company's risk level, decision makers become more sensitive to any changes in the environment and hence are able to draw up preventive measures and plan emergency actions in a more rational manner.