A New Model for Risk Management in Investment Projects Selection by Fuzzy FMEA and ANP

Document Type : applied


1 Assistant Prof. Industrial Engineering, Payame Noor University,Tehran, Iran

2 MSc., Industrial Engineering, Payame Noor University, Tehran, Iran


Since the risk is an important subject in the selection of oil projects, many researchers focus on the optimization of project selection and enhancement of the security of energy supplies development. Previous studies have been widely developed using optimization techniques to somewhat reduce the risk of energy resources. This study selected National Iranian Oil Company as a case study and classified the risks of the development and production projects and then the weight of each risk was determined using the failure analysis techniques and fuzzy numbers. Then, the relative impact of each risk on return of projects was obtained by fuzzy analytical hierarchy process. Then using the weight of each risk, its relative impact on return and the proposed model based Markowitz model, the overall effect of risks on the portfolio final return was determined. The results show in optimistic situation investment in developing projects will be profitable but in pessimistic situation, it suggests investment in production projects for risky investor and investment in development projects for risk-averse investor.
JEL: G11, G21, G32
How to cite this paper: Salehi, M., & Hoseinpour, Z. (2016). A New Model for Risk Management in Investment Projects Selection by Fuzzy FMEA and ANP. Quarterly Journal of Risk Modeling and Financial Engineering, 1(2), 244–263. (In Persian)


Main Subjects

Akbariyan, R., & Diyanati, M. H., (2006). Risk Management in Non-Riba Banking. Journal of Islamic Economics, 6(24), 153-170. (In Persian).
Chapman, C. B. (1991). Risk, in Investment, Procurement and Performance in Construction. E. & F.N. Spon (Chapman and Hall), London.
Ching Chow, Y. (2003). A MCDM Approach for Six Sigma Project Selection. The Conference of Knowledge and Value Management.
Dorri, B.&  Hamzei, A. (2010). Strategies Determination of Response to Risk in Risk Management Techniques by ANP (Case Study: North Azadegan Oil Field Development Project). Journal Industrial Management, 2(4), 75-92. (In Persian).
Dorri, B., Moazzez, E.,&  Salami, H., (2008). Hybrid Approach in Risk Analysis Using Failure Mode and Effects Analysis (FMEA) and Analytic Network Process (ANP). Iranian Management Research Journal, 14 (4), 107-136. (In Persian).
Ebrahimi, M. & Ghanbari, A. R. (2009). Risk Coverage in Oil Revenues Using Futures Contracts in Iran. Economic Bulletin,3(34), 173-204. (In Persian)
Huang X. (2007), Optimal project selection with random fuzzy parameters. International Journal Production Economics, 106(2), 513–522.
Javaheri. B., & Rezaei S. (2010). Effective Factors on Oil Demand in Developing Countries (Case Study: India) and Short Term Forecasting of Iranian Oil Sales to India. (1970-2005). Journal of Knowledge & Development, 17(34), 51-68. (In Persian)
Karimzadeh fard, B. (2006). Favorite Project Selection in Transport Firms Using Bernado Decision Making Technique. Transportation Letters, 4(4), 108-117. (In Persian).
Lee, E., Park, Y., & Gye Shin, J. (2008). Large Engineering Project Risk Management Using a Bayesian Belief Network. Expert Systems with Applications, 36(3), 5880-5887.
Lorie, J. H., & Savage, L. J. (1955). Three Problems in Rationing Capital. The Journal of Business, 28(4), 229–239.
Markowitz, H. (1952). Portfolio Selection. Journal of Finance, 7(1), 77-91.
Nasrabadi, A., Hosseinpour, M. H., & Ebrahimnejad, S. (2013). Strategy-Aligned Fuzzy Approach for Market Segment Evaluation and Selection: A Modular Decision Support System by Dynamic Network Process (DNP). Journal of Industrial Engineering International, 37(9), 1-17.
Osouli, S. H. (2005). Guide to the Project Management Body of Knowledge. Research and Development Center of Project Management, Petrochemical National Company, Tehran. (In persian).
Pakdin Amiri, M. (2010). Project Selection for Oil-Fields Development by Using The AHP and Fuzzy TOPSIS Methods, Department of Accounting and Industrial Management, I.A.U. Babol Branch, Expert Systems with Applications, 37(9), 6218-6224.
Seddigh Raisi, A. & Makouyi, A. (2011). Combine Multiple Criteria Hybrid Model Design for Six Sigma Projects Selection. Journal of Operations Research and Applications, 8 (4), 71-92. (In Persian).
Su, C. T., & Chou, C. J. (2008). A Systematic Methodology for The Creation of Six Sigma Projects (A Case Study of Semiconductor Foundry(, Expert Systems with Applications, 34(4),2693–2703.
Tka, c. M., & Lyocsa, S. (2009) On The Evaluation of Six Sigma Projects. Qualification Reliability Engineeing International, 26(1), 115-124.
Wanga, Y. (2009). Risk Evaluation in Failure Mode and Effects Analysis Using Fuzzy Weighted Geometric Mean. Expert Systems with Application, 36(2), 1195–1207.
Weingartner, H. M. (1963). Mathematical Programming and The Analysis of Capital Budgeting Problems. Prentice-Hall Press, Englewood.
Weingartner, H. M. (1966). Criteria for Programming Investment Project Selection. The Journal of Industrial Economics, 15(1), 65–76.