Internet Finance’s Risk And Precaution In Our Country

Internet Finance, as a new mode and business, has generated with the development of Cloud Computation, Payment Platform and the Social Network. It refers to all the financial activities working via the internet service platform. Mainly including four parts: fund procurement, monetary circulation, currency payments and Currency Issue. Internet Finance has some good characteristics, for example, high transparency and openness, low operating costs, high resource allocation and service efficiency, makes up the deficiency of the traditional financial institutions. But at the same time it also faces big risks because of the lack of regulation. The risks mainly can be divided into five portions: information security risk, operation risk, credit risk, business risk, legal and reputation risk etc. Recently, we can see that some new Internet financial products appear, such as Yu Ebao, Cash paying treasure, and We Chat financial red envelopes. This phenomenon has aroused wide attention and different people have different ideas. But we all find many kinds of risks. For example, the money in Yu Ebao was stolen, some P2 P platform went bankrupt. So how do we treat the Internet finance, how to regulate the development of Internet Finance, it is a urgent problem for us to solve.This paper takes the Internet Finance as the research object, and separates it into different grades. I combine Analytic Hierarchy Process(AHP) with Fuzzy Mathematics Theory to explore the risk of Internet Finance, so that we can get the main factors affecting the Internet Finance security. This paper mainly includes six parts. Firstly, I search many relevant document and summarize the latest version about this topic; Secondly, introduce some basis knowledge about the internet finance; Thirdly, present the risk status in our country; The next is the empirical analyzing, we can calculate the order of different risks and the current situation; Then we can refer some abroad experience about the risk prevention; The last is the proposal how to decrease the risk according to the development of China..The empirical results show that currently Internet Financial system is at a very high risk status in our country. Among all the risks, the largest one is information security risk, so that we should pay much more attention to it, especially to avoid Phishing Fraud risk and Trojan Software risk; Secondly is the operation risk, especially focus on the business relationship risk; The third one is credit risk. Finally all financial activities are the process of credit evaluation, and we need to pay more attention to the Internet financial enterprises’ credit risk compared with the fund demand side; The forth one is business risk, we should focus on liquidity risk; The last one is legal and reputation risk, the business entity risk is very prominent.