Theoretical optimisation of IT/IS investments: A research note

The justification of Information Technology (IT) is inherently fuzzy, both in theory and practice. The reason for this is due to the largely intangible dimensions of IT projects. In view of this, this research note presents the results of on-going research, in the application of Fuzzy Cognitive Mapping (FCM), as a tool to identify complex functional interrelationships associated with the justification of IT. This paper presents a theoretical functional model which describes these relationships, and by using an FCM, further interrelationships are developed in the context of justifying IT projects. A procedure which would address the optimisation of these intangible relationships in the form of a Genetic Algorithm (GA) is proposed as a process for Investment Justification

Soft computing and its use in risk management

New analytical methods have begun to be used in risk management. The methods such as fuzzy logic, neural network and genetic algorithms rank among them. The article shortly describes these methods and represents their possible applications in the risk management. These methods can contribute to decreasing of the risk and thus the human and material losses

Towards a Comprehensible and Accurate Credit Management Model: Application of four Computational Intelligence Methodologies

The paper presents methods for classification of applicants into different categories of credit risk using four different computational intelligence techniques. The selected methodologies involved in the rule-based categorization task are (1) feedforward neural networks trained with second order methods (2) inductive machine learning, (3) hierarchical decision trees produced by grammar-guided genetic programming and (4) fuzzy rule based systems produced by grammar-guided genetic programming. The data used are both numerical and linguistic in nature and they represent a real-world problem, that of deciding whether a loan should be granted or not, in respect to financial details of customers applying for that loan, to a specific private EU bank. We examine the proposed classification models with a sample of enterprises that applied for a loan, each of which is described by financial decision variables (ratios), and classified to one of the four predetermined classes. Attention is given to the comprehensibility and the ease of use for the acquired decision models. Results show that the application of the proposed methods can make the classification task easier and - in some cases - may minimize significantly the amount of required credit data. We consider that these methodologies may also give the chance for the extraction of a comprehensible credit management model or even the incorporation of a related decision support system in bankin

Fuzzy Logic and Its Uses in Finance: A Systematic Review Exploring Its Potential to Deal with Banking Crises

The major success of fuzzy logic in the field of remote control opened the door to its application in many other fields, including finance. However, there has not been an updated and comprehensive literature review on the uses of fuzzy logic in the financial field. For that reason, this study attempts to critically examine fuzzy logic as an effective, useful method to be applied to financial research and, particularly, to the management of banking crises. The data sources were Web of Science and Scopus, followed by an assessment of the records according to pre-established criteria and an arrangement of the information in two main axes: financial markets and corporate finance. A major finding of this analysis is that fuzzy logic has not yet been used to address banking crises or as an alternative to ensure the resolvability of banks while minimizing the impact on the real economy. Therefore, we consider this article relevant for supervisory and regulatory bodies, as well as for banks and academic researchers, since it opens the door to several new research axes on banking crisis analyses using artificial intelligence techniques

Agent-based hybrid framework for decision making on complex problems

Electronic commerce and the Internet have created demand for automated systems that can make complex decisions utilizing information from multiple sources. Because the information is uncertain, dynamic, distributed, and heterogeneous in nature, these systems require a great diversity of intelligent techniques including expert systems, fuzzy logic, neural networks, and genetic algorithms. However, in complex decision making, many different components or sub-tasks are involved, each of which requires different types of processing. Thus multiple such techniques are required resulting in systems called hybrid intelligent systems. That is, hybrid solutions are crucial for complex problem solving and decision making. There is a growing demand for these systems in many areas including financial investment planning, engineering design, medical diagnosis, and cognitive simulation. However, the design and development of these systems is difficult because they have a large number of parts or components that have many interactions. From a multi-agent perspective, agents in multi-agent systems (MAS) are autonomous and can engage in flexible, high-level interactions. MASs are good at complex, dynamic interactions. Thus a multi-agent perspective is suitable for modeling, design, and construction of hybrid intelligent systems. The aim of this thesis is to develop an agent-based framework for constructing hybrid intelligent systems which are mainly used for complex problem solving and decision making. Existing software development techniques (typically, object-oriented) are inadequate for modeling agent-based hybrid intelligent systems. There is a fundamental mismatch between the concepts used by object-oriented developers and the agent-oriented view. Although there are some agent-oriented methodologies such as the Gaia methodology, there is still no specifically tailored methodology available for analyzing and designing agent-based hybrid intelligent systems. To this end, a methodology is proposed, which is specifically tailored to the analysis and design of agent-based hybrid intelligent systems. The methodology consists of six models - role model, interaction model, agent model, skill model, knowledge model, and organizational model. This methodology differs from other agent-oriented methodologies in its skill and knowledge models. As good decisions and problem solutions are mainly based on adequate information, rich knowledge, and appropriate skills to use knowledge and information, these two models are of paramount importance in modeling complex problem solving and decision making. Follow the methodology, an agent-based framework for hybrid intelligent system construction used in complex problem solving and decision making was developed. The framework has several crucial characteristics that differentiate this research from others. Four important issues relating to the framework are also investigated. These cover the building of an ontology for financial investment, matchmaking in middle agents, reasoning in problem solving and decision making, and decision aggregation in MASs. The thesis demonstrates how to build a domain-specific ontology and how to access it in a MAS by building a financial ontology. It is argued that the practical performance of service provider agents has a significant impact on the matchmaking outcomes of middle agents. It is proposed to consider service provider agents\u27 track records in matchmaking. A way to provide initial values for the track records of service provider agents is also suggested. The concept of ‘reasoning with multimedia information’ is introduced, and reasoning with still image information using symbolic projection theory is proposed. How to choose suitable aggregation operations is demonstrated through financial investment application and three approaches are proposed - the stationary agent approach, the token-passing approach, and the mobile agent approach to implementing decision aggregation in MASs. Based on the framework, a prototype was built and applied to financial investment planning. This prototype consists of one serving agent, one interface agent, one decision aggregation agent, one planning agent, four decision making agents, and five service provider agents. Experiments were conducted on the prototype. The experimental results show the framework is flexible, robust, and fully workable. All agents derived from the methodology exhibit their behaviors correctly as specified

Advancing the state of the art in the modelling and simulation of information systems evaluation

It is widely accepted that Information Systems Evaluation (ISE) is a powerful and useful technique that can be used to assess IT/IS investments in an a-priori or a-posteriori sense. Traditional approaches to ISE have tended to centre upon financial and management accounting frameworks, seeking to reconcile tangible and intangible costs, benefits, risks and value factors. Such techniques, however, do not provide the IS researcher or practitioner with further insight or appreciation of any inherent and implicit inter-relationships, in the investment justification process. Thus, this paper outlines and discusses via a taxonomy and resulting classification, alternative and complementary approaches that can be applied to ISE from the fields of Artificial Intelligence (AI), Operational Research (OR) and Management Science (MS). The paper subsequently concludes that such approaches can be potentially used by researchers and practitioners in the field, as a basis for carrying out further research in the field of applied ISE