Abstract:

In the economical practice, risk managers in theBanks select the projects for financing based on a very precise analysis. One of the most used methods is SWOT analysis. This kind of selection firstly underlines the strength points and weakness points, from their performance point of view. There will be established points for each possible value of these criteria, in order to determine each project’s scoring.

Starting with these criteria, the decision space of risk managers can be delimited; inside of this estimated lending risks will be minimum. This decisional space can be mathematically described with combinatory algebra, starting with the idea that performance indicators scores, risk scores etc. will be considered as simple components of a multi-dimensional vector.

In consequence, will construct an algebrical representation which together with the decisional space, will highlight SWOT method utility, from quality point of view, in the approach of risk types highlighted by Basel II.