Fuzzy Logic-based Risk Evaluation in a Virtual Organisation

Abstract

This paper concerns risk identification and evaluation in a network based enterprise collaboration, such as virtual organisation (VO). Risk factors or sources presented in each of the four stages in a VO’s life cycle - pre-creation, creation, operation and termination, are identified. After having been perceived as risks, these risk factors need to be evaluated. Each risk is described by the probability or likelihood of failure occurrence and risk impact or consequence. Both measures are specified using imprecise linguistic terms and modelled by fuzzy sets. A fuzzy logic based algorithm for collaboration risk evaluation is proposed and analysed. A web service Collaboration Risk Evaluator (CRE), within which the algorithm is embedded, is developed to assist enterprise users to identify risk factors, provide fuzzy assessment on these risk factors, and facilitate control of the risk propagation.