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

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.