Sectoral risk assessment: a case of the latvian forestry sector

Abstract

The present study provides an analysis of sectoral risk in the forestry sector and presents an overview of multiple-criteria decision analysis (MCDA) for sector development assessment. The main aim of the paper is to determine the macroeconomic indicators and to assess sectorial risk, which is caused by unexpected macroeconomic and market changes. The paper presents a methodological framework for the analysis of sectoral level risk to assess the probability of the stable development of the industry and to de-termine the risk for the forestry sector (industry). Based on expert opinions and analytic hierarchy process (AHP), the authors have identified and evaluated macroeconomic industry-level data indicators (factors) used to determine the development of the forestry sector. An analysis matrix with the defined and verified indicators (factors) is presented; the comparison between sectoral inicators and sectoral volatility is shown. In order to combine industry development indicators (factors) expressed in different units of meas-urement and to establish a comprehensive indicator of industry development, the statistical standardisation (normalisation) of indicators is performed.