The Importance of Risk Disclosure in Financial Management: A  Neutrosophic Multi-Criteria Decision-Making Approach

Abdulaziz Ali Murayr

Authors

Abdulaziz Ali Murayr Accounting Department, Faculty of Business, University of Tabuk, Tabuk, Saudi Arabia, KSA

Keywords:

Financial Management; Risk Management; Risk Disclosure; Multi-Criteria Decision Making; Neutrosophic Set.

Abstract

Risk disclosure plays a vital role in promoting transparency, stability, and efficiency in
stock markets by providing investors with the necessary information to make well-informed
decisions. However, its effectiveness varies across companies, industries, and regulatory
frameworks, influencing market volatility, investor confidence, and overall financial stability.
This study applies a Multi-Criteria Decision-Making (MCDM) methodology to analyze different
factors affecting risk disclosure. Specifically, we use the Entropy method to determine the weight
of each criterion and the MAIRCA method to rank alternatives based on their importance. To
address uncertainty in the evaluation process, we incorporate the Type-2 Neutrosophic Set as a
mathematical approach to deal with imprecise or incomplete information. To ensure the
reliability and robustness of our findings, we conducted sensitivity and comparative analyses,
testing the stability of the rankings and the effectiveness of our proposed approach. This study
highlights the critical role of risk disclosure in financial management and provides a quantitative
framework that can help companies and investors assess risks more accurately and make better
financial decisions.

DOI: 10.5281/zenodo.15061729