Environmental risk modelling and decision–making processes

Abstract

This chapter discusses the role of decision support methods in environmental risk modeling. In particular, the decision-making dilemmas faced by banks in the context of environmental risk management are presented, and the possibilities offered by the MCDA methods to solve decision-making problems are indicated in the context of assumptions for environmental risk modeling. Traditional and fuzzy approaches are presented. Among others, MCDA methods are implemented to assess the role of environmental factors in the decision-making process of banks (risk assessment). The multi-criteria decision-making (MCDA) method is used to make balanced decisions in financial institutions and enterprises that take into account environmental risk. MCDA is a set of mathematical methods and tools that enable comparison of decision variants with the consideration of different, often conflicting criteria. There is a whole range of multi-criteria methods and categories of their division and rich literature describing their use. First of all, they can be classified into two groups: the methods aimed at solving continuous problems (multi-criteria linear programming) and the discrete ones.