Multi-factor financial planning: an outline and illustration

This paper deals with the support of strategically oriented financial planning processes in business firms. In handling a financial planning problem, the decision maker has to deal with a number of complications. In this paper special attention is paid to the risk with regard to the outcomes of the financial plan and the existence of multiple, conflicting goals. An interactive approach to financial planning is presented. Risk is modeled by means of so-called multi-factor risk models and multiple goals are explicitly accounted for through the use of an interactive goal programming method. The use of the interactive approach will be numerically demonstrated by means of an exemplary planning problem.