Construction of Mathematical Formulation of Sustainable Riskfor Swiftlet Ranchers: A Composite Index Approach

Abstract

Malaysia has become one of the world’s major producers and exporters of swiftlet birds' nests, which contribute significantly to the Malaysian economy. Despite its growth, the industry faces risks that expose it to sustainability challenges, which can affect production and profitability. As such, the risks involved in the swiftlet ranching industry need to be understood and managed before swiftlet ranchers implement effective risk management strategies to maintain the industry as a sustainable business. Therefore, swiftlet ranchers require a measurement tool to assess the level of risk they encounter in sustaining their businesses. This study utilized the factor analysis approach to identify and evaluate key factors contributing to sustainable risk. The researchers developed a mathematical formulation of sustainable risk based on a basic composite index formulation. The development of the sustainability risk index can be a measurement tool that helps the swiftlet ranchers assess their level of sustainable risk. Consequently, this study has the main aim of developing a mathematical modeling formulation by constructing a general risk index equation for the swiftlet ranching industry in Malaysia. The key stakeholders interviewed identified the five major risk factors relating to swiftlet operations. Findings of the study, where all the risk factors were analyzed for their weights, were also used to build a general formulation of the risk index function for the swiftlet ranching industry in Malaysia. Hence, this research will identify and assign weight to the key risk factors, generating a mathematical risk index that covers the swiftlet ranching industry to preserve it.