Risk-Based Decision Making Framework for Investment in the Real Estate Industry
Investment in the real estate industry is subject to high risk, especially when there are a large number of uncertainty factors in a project. Risk analysis has been widely used to make decisions for real estate investment. Accordingly, risk-based decision making is a vital process that should be considered when a list of projects and constraints are being assessed. This chapter proposes a risk-based decision making (RBDM) framework for risk analysis of investment in the real estate industry, based on a review of the research. The framework comprises the basic concepts, process, sources and factors, techniques/approaches, and issues and challenges of RBDM. The framework can be applied to problem solving different issues involved in the decision making process when risk is a factor. Decision makers need to understand the terms and concepts of their problems and be familiar with the processes involved in decision making. They also need to know the source of their problems and the relevant factors involved before selecting the best and most suitable technique to apply to solve their problems. Furthermore, decision makers need to recognize the issues and challenges related to their problems to mitigate future risk by monitoring and controlling risk sources and factors. This framework provides a comprehensive analysis of risk-based decision making and supports decision makers to enable them to achieve optimal decisions. © Springer-Verlag Berlin Heidelberg 2012.
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