Research On Risk Management Of Yu’e Bao

On June17th,2013, Alibaba Group announced that its first internet financeproduct—Yu’e Bao was officially launched into the market. At the end of December2013, the number of the users had been over forty three million, and the total scale ofthe fund had reached one hundred eighty five point three billion. The correspondingfund-Zeng li Bao Money Market Fund becomes the largest fund in the market. Theowner of the fund-Tian Hong Fund Company becomes the second largest fundcompany in China. Yu’e bao meets the trend of the development of the Internet, withthe broader users basement of Internet channels and technological advantages, Yu’eBao got rapid development. At the same time, we should also see the essence of Yu’eBao is still a kind of financial products, but many of the existing system of financialregulation does not adapt the development and regulatory for Yu’e Bao. And if thereare some risks come out to influence the investment income, the investors will turn toother assets that Yu’e Bao will shrink quickly or even disappear. So this paper mailyanalyze from the investors’ perspective, to study the character and difference from thetradition banking products to find out the risk can influence the income of Yu’e Bao.This paper will do good to the development of Inter financial products such as Yu’eBao.On the basis above, the main research of this article was as follows:Firstly， this paper introduces related theory of internet finance and riskmanagement in and abroad, and accordingly describes the research content, theframework and research methods. And then, this article introduces fundamentaltheories related to financial risk, the methods of risk identification, riskassessment techniques and risk control methods. Then this paper tells the backgroundof Yu’e Bao, emphasized on analyzing the features, the objecting basis and effects ofYu’e Bao. Based on identifying risk theories, this article uses the subjective riskdetermination and scenarios method to analyze the risk of Yu’e Bao and comes out5most important risk accordingly: the trust risk, liquidity risk, interest rates risk,politics risk and operation risk. Then through the selection of data and confidence, it builds up the index for Yu’e Bao’s risk evaluation. Meanwhile, it uses the VaR methodto measure the risk of Yu’e Bao and get the conclusion that while existing highpossibility of default, unstable income, serious external supervision policy and thetechnical risk factors, the risk of Yu’e Bao is within the controllable level. Finallyaccording to the risk measurement results, this paper proposed specific measures inregarding of the credit risk, liquidity risk, interest rate risk, policy risk and operationalrisk, to reduce the risk of Yu’e Bao, ensuring the healthy development of Yu’e Bao,one of representatives of the Internet financial products.The innovation of this paper is to use risk management，instance analysis andVaR method test as well as comprehensive studying of Yu’e Bao. This paper makesin-depth analysis of the main risks of Yu’e Bao, and puts forward the countermeasuresaccordingly. This paper’s research has important practical significance for thehealthy development of Yu’e Bao as the representative of the Internet financialproducts.