Predicting business failure using artificial intelligence system

This thesis was submitted for the award of Doctor of Philosophy and was awarded by Brunel University LondonPredicting business insolvency is considered one of the main supportive sources of information for decision making for financial institutions, investors, creditors, and other participants in the business market. Financial reporting systems provide relevant information that can be used to assess the financial position of firms. It is crucial to have classification and prediction models that can analyse this financial information and provide accurate assurance for users about business health. Recent studies have explored the use of machine learning tools as substitute for traditional statistical methods to develop classification models to classify firm insolvency according to financial statement information. However, these models have no ideal classifier, since each provides a certain percentage of wrong outputs, which is a crucial consideration; every percentage of wrong response can mean massive financial losses for stakeholders. Therefore, this study proposes new insolvency classification and perdition models based on machine learning modelling techniques to develop an improved classifier. Individual modelling techniques using statistical methods and machine learning were used to develop the classification model of business insolvency. The results showed that machine learning method outperformed statistical methods. Deep Learning (DPL) achieved the highest performance based on all performance measurements used in the study, and it was the best individual classifier, with average accuracy of 97.2% using all-years dataset. Ensemble- Boosted Decision Tree classifier ranked second, followed by Decision Tree classifier. Thus, it has been proven that DPL modelling approach is useful for business insolvency classification. A key contribution in enhancing individual classifier outputs is the use of traditional combining methods with two new aggregation methods in business insolvency (Fuzzy Logic and Consensus Approach). The Consensus Approach showed the best improvement in the results of all individual classifiers with average accuracy of 97.7%, and it is considered the best classification method not only in comparison with individual classifiers, but also with traditional combiners. This study pioneers the development of a time series business insolvency prediction model with Big Data for UK businesses. The aim of the model is to provide early prediction about a business health. Three prediction models were developed based on Nonlinear Autoregressive with Exogenous Input models (NARX), Nonlinear Autoregressive Neural Network (NAR), and Deep Learning Time-series model (DPL-SA) and achieved average accuracy rates of 83.6%, 89.5%, and 91.35%, respectively. The results show relatively high performance in comparison with the best individual classifier (deep learning)

3D Robotic Sensing of People: Human Perception, Representation and Activity Recognition

The robots are coming. Their presence will eventually bridge the digital-physical divide and dramatically impact human life by taking over tasks where our current society has shortcomings (e.g., search and rescue, elderly care, and child education). Human-centered robotics (HCR) is a vision to address how robots can coexist with humans and help people live safer, simpler and more independent lives. As humans, we have a remarkable ability to perceive the world around us, perceive people, and interpret their behaviors. Endowing robots with these critical capabilities in highly dynamic human social environments is a significant but very challenging problem in practical human-centered robotics applications. This research focuses on robotic sensing of people, that is, how robots can perceive and represent humans and understand their behaviors, primarily through 3D robotic vision. In this dissertation, I begin with a broad perspective on human-centered robotics by discussing its real-world applications and significant challenges. Then, I will introduce a real-time perception system, based on the concept of Depth of Interest, to detect and track multiple individuals using a color-depth camera that is installed on moving robotic platforms. In addition, I will discuss human representation approaches, based on local spatio-temporal features, including new “CoDe4D” features that incorporate both color and depth information, a new “SOD” descriptor to efficiently quantize 3D visual features, and the novel AdHuC features, which are capable of representing the activities of multiple individuals. Several new algorithms to recognize human activities are also discussed, including the RG-PLSA model, which allows us to discover activity patterns without supervision, the MC-HCRF model, which can explicitly investigate certainty in latent temporal patterns, and the FuzzySR model, which is used to segment continuous data into events and probabilistically recognize human activities. Cognition models based on recognition results are also implemented for decision making that allow robotic systems to react to human activities. Finally, I will conclude with a discussion of future directions that will accelerate the upcoming technological revolution of human-centered robotics

Integration of decision support systems to improve decision support performance

Decision support system (DSS) is a well-established research and development area. Traditional isolated, stand-alone DSS has been recently facing new challenges. In order to improve the performance of DSS to meet the challenges, research has been actively carried out to develop integrated decision support systems (IDSS). This paper reviews the current research efforts with regard to the development of IDSS. The focus of the paper is on the integration aspect for IDSS through multiple perspectives, and the technologies that support this integration. More than 100 papers and software systems are discussed. Current research efforts and the development status of IDSS are explained, compared and classified. In addition, future trends and challenges in integration are outlined. The paper concludes that by addressing integration, better support will be provided to decision makers, with the expectation of both better decisions and improved decision making processes

An insight into the experimental design for credit risk and corporate bankruptcy prediction systems

Over the last years, it has been observed an increasing interest of the finance and business communities in any application tool related to the prediction of credit and bankruptcy risk, probably due to the need of more robust decision-making systems capable of managing and analyzing complex data. As a result, plentiful techniques have been developed with the aim of producing accurate prediction models that are able to tackle these issues. However, the design of experiments to assess and compare these models has attracted little attention so far, even though it plays an important role in validating and supporting the theoretical evidence of performance. The experimental design should be done carefully for the results to hold significance; otherwise, it might be a potential source of misleading and contradictory conclusions about the benefits of using a particular prediction system. In this work, we review more than 140 papers published in refereed journals within the period 2000–2013, putting the emphasis on the bases of the experimental design in credit scoring and bankruptcy prediction applications. We provide some caveats and guidelines for the usage of databases, data splitting methods, performance evaluation metrics and hypothesis testing procedures in order to converge on a systematic, consistent validation standard.This work has partially been supported by the Mexican Science and Technology Council (CONACYT-Mexico) through a Postdoctoral Fellowship [223351], the Spanish Ministry of Economy under grant TIN2013-46522-P and the Generalitat Valenciana under grant PROMETEOII/2014/062

Predictive control approaches to fault tolerant control of wind turbines

This thesis focuses on active fault tolerant control (AFTC) of wind turbine systems. Faults in wind turbine systems can be in the form of sensor faults, actuator faults, or component faults. These faults can occur in different locations, such as the wind speed sensor, the generator system, drive train system or pitch system. In this thesis, some AFTC schemes are proposed for wind turbine faults in the above locations. Model predictive control (MPC) is used in these schemes to design the wind turbine controller such that system constraints and dual control goals of the wind turbine are considered. In order to deal with the nonlinearity in the turbine model, MPC is combined with Takagi-Sugeno (T-S) fuzzy modelling. Different fault diagnosis methods are also proposed in different AFTC schemes to isolate or estimate wind turbine faults.The main contributions of the thesis are summarized as follows:A new effective wind speed (EWS) estimation method via least-squares support vector machines (LSSVM) is proposed. Measurements from the wind turbine rotor speed sensor and the generator speed sensor are utilized by LSSVM to estimate the EWS. Following the EWS estimation, a wind speed sensor fault isolation scheme via LSSVM is proposed.A robust predictive controller is designed to consider the EWS estimation error. This predictive controller serves as the baseline controller for the wind turbine system operating in the region below rated wind speed.T-S fuzzy MPC combining MPC and T-S fuzzy modelling is proposed to design the wind turbine controller. MPC can deal with wind turbine system constraints externally. On the other hand, T-S fuzzy modelling can approximate the nonlinear wind turbine system with a linear time varying (LTV) model such that controller design can be based on this LTV model. Therefore, the advantages of MPC and T-S fuzzy modelling are both preserved in the proposed T-S fuzzy MPC.A T-S fuzzy observer, based on online eigenvalue assignment, is proposed as the sensor fault isolation scheme for the wind turbine system. In this approach, the fuzzy observer is proposed to deal with the nonlinearity in the wind turbine system and estimate system states. Furthermore, the residual signal generated from this fuzzy observer is used to isolate the faulty sensor.A sensor fault diagnosis strategy utilizing both analytical and hardware redundancies is proposed for wind turbine systems. This approach is proposed due to the fact that in the real application scenario, both analytical and hardware redundancies of wind turbines are available for designing AFTC systems.An actuator fault estimation method based on moving horizon estimation (MHE) is proposed for wind turbine systems. The estimated fault by MHE is then compensated by a T-S fuzzy predictive controller. The fault estimation unit and the T-S fuzzy predictive controller are combined to form an AFTC scheme for wind turbine actuator faults

Bibliographical review on cyber attacks from a control oriented perspective

This paper presents a bibliographical review of definitions, classifications and applications concerning cyber attacks in networked control systems (NCSs) and cyber-physical systems (CPSs). This review tackles the topic from a control-oriented perspective, which is complementary to information or communication ones. After motivating the importance of developing new methods for attack detection and secure control, this review presents security objectives, attack modeling, and a characterization of considered attacks and threats presenting the detection mechanisms and remedial actions. In order to show the properties of each attack, as well as to provide some deeper insight into possible defense mechanisms, examples available in the literature are discussed. Finally, open research issues and paths are presented.Peer ReviewedPostprint (author's final draft

On the role of distance transformations in Baddeley’s Delta Metric

Comparison and similarity measurement have been a key topic in computer vision for a long time. There is, indeed, an extensive list of algorithms and measures for image or subimage comparison. The superiority or inferiority of different measures is hard to scrutinize, especially considering the dimensionality of their parameter space and their many different configurations. In this work, we focus on the comparison of binary images, and study different variations of Baddeley's Delta Metric, a popular metric for such images. We study the possible parameterizations of the metric, stressing the numerical and behavioural impact of different settings. Specifically, we consider the parameter settings proposed by the original author, as well as the substitution of distance transformations by regularized distance transformations, as recently presented by Brunet and Sills. We take a qualitative perspective on the effects of the settings, and also perform quantitative experiments on separability of datasets for boundary evaluation.The authors gratefully acknowledge the financial support by the Spanish Ministry of Science (project PID2019-108392GB-I00 AEI/FEDER, UE), as well as that by Navarra Servicios y Tecnologías S.A. (NASERTIC)

Measurements, Models, Systems and Design

531 s.