Research On Financial Risk Management Of Independent College

Independent College is a new educational mode in the reform of China’s highereducation. It has become an important part of private higher education. AsIndependent College is held with no support of government financial funds, the fundsrequired for the construction and the daily running and other related expenses are paidby partner or private capital. Independent College bears the consequences ofmanagement by itself. Some problems appear gradually, after rapid development ofIndependent College. For example, the scale of the campus construction results in alarge of debts; Independent College can’t complete recruiting students as planned.Independent college runs without the guarantee of governmental investment, andexistents many internal and external problems. Independent College faces higherfinancial risk than average college. Therefore, Independent College needs to face upto the financial risk, and discusses the preventive and reduce measures of the financialrisk. Analyzing correctly the types and causes of financial risk and evaluatingeffectively the financial risk are the need to reduce financial loss and developmentsustainably.In this paper, the financial risk of the Independent College is divided into fourtypes in accordance with the four links of capital movement. They are fundraising risk,investment risk, capital recovery risk and risk and balance distribution risk. On thebasis of the theory of financial risk, this paper analysis the causes of each type ofIndependent college’s financial risk and propose the preventions for risk and controlmeasures. In order to make Independent College evaluate its own financial riskeffectively, this paper constructs a kind of suitable method for evaluating the financialrisk of Independent College based on the fuzzy comprehensive evaluation. It selectsthe11evaluation indexes from the financial indexes of Independent College toconstruct the index system. Then use the fuzzy comprehensive evaluation based onthe analytic hierarchy process (AHP) to evaluate the financial risk of Independent College. In the final, it analyzes the innovation and the shortcomings of this paper.The purpose of this paper is to provide advices for Independent College of therecognition, reducing and avoiding the financial risk, promote the stable developmentof Independent College.