Logical and probabilistic models of risk in business

The theory of logic and probabilistic (LP) simulation, not very well-known to mathematicians and economists, is used and developed. The logical addition of initiating events is used. Events can have the logical connections AND, OR, NOT. The risk LP-model can have cycles and repeated elements. A risk object is described by a great number of signs, each of them has up to 10 gradations. Events-signs are independent events. Events-gradations form groups of incompatible events (GIE). The events have clear probabilistic sense. Risk LP-models for business are built as association ones on the base of common sense and are the hypotheses of failure scripts. In simplest case a failure happens, if any event, any two events,... or all initiating ones take place. In detail the technique of identification of risk LP-models on statistical data is considered. Copyright (C) 2000 IFAC.