There is great difference between online finance and traditional finance

Economic Observer Zhu Xiaohuang / article crowdfunding fast-reeling, causing people to worry about the accumulation of Internet financial risks. Crowdfunding operations are currently conditional on risk. Under market conditions, the risk itself is beyond reproach. However, the real risk is the channel of legal remedies after the risk is assumed to claim the interest and recover the losses. Without such a legal environment and more and more free financing, the greater the accumulation of cyber risks will eventually lead to the damage to public interests and the destruction of market order. Therefore, the crowdfunding mode based on the assumption of risk is like a heap of gravel, and collapse is very likely. The worries of crowdfunding worrying about the risk management of trades on the Internet all have disturbing hidden dangers. The top priority is how to establish the risk control system of internet trading, and the first thing to do is to find out the framework material of network risk control, That is the main responsibility of risk control and the basic methods and tools.

(A) large differences between online finance and traditional finance

The function of the Internet relies on its core technologies such as sensor technology, radio frequency identification technology, MEMS functions and the use of technologies such as GPS, radio and television networks, and engine search. The core value of Internet finance relies on the realization of financial functions on the Internet, Especially the network of risk management technology.

Traditional financial risk management is based on physical clues. For example, the bank's traditional credit policy, the choice of industry, largely based on the actual data and examples of some industries analysis and comparison of the actual investigation, which is the physical examination can make the analysis and judgment; actuarial insurance company for a product, but also based on The preference of a certain type of customer and the actual statistics are used for calculation. The bank also requires more information on the actual debts that truly reflects the physical form as well as face-to-face, contactable and verifiable conditions. Ultimately accessible in the real world, risk managers (risk) uncertainty control of things gradually accumulated a variety of methods, tools and basic measurement models, these risk tools are based on the data, the premise It is ultimately realistic and accessible to invest and inject credit. Therefore, the traditional risk management is the thing in the physical world, at least the object is definite.

But in the virtual world, all the transactions and payments are carried out between the network symbols, even the transaction object has a great deal of uncertainty, is it more difficult to control the risk?

(B) firmly grasp the big data

In fact, the virtual world is just the mapping of the real world, and all the risks in the real world will be fully reflected and exposed in the virtual world by other means. Risk Management Even in the physical world, the most essential tool is to conclude on the basis of data analysis that the length, depth and breadth of the data determine the accuracy of risk projections such as default probability and probability of loss. Data is a virtual thing, and fictitious networks coincide, so the network provides a better and more complete environment for data acquisition and analysis, the data source more convenient, the data is more diverse and more complete, Make the risk control on the network more effective and reliable. All the know-how of how to form a complete data-based risk management system on the network lies in the integrity and correct use of big data.

The characteristics of big data are generally defined by 4V, namely Volume, Velocity, Variety and Veracity. Network risk management is based on the integrity and authenticity of big data. Integrity is the guarantee of information symmetry and the control of the uncertainty of authenticity.

The use of big data requires a good technical environment and human environment. The so-called technical environment refers to the technology platform (network) that can realize high-quality, fast and complete data collection and can meet the requirements of data 4V. The technical environment is the basis of network transactions, losing the good technical environment and the network transactions can not be carried out. Risk management can not be started. Human environment refers to the correct understanding of big data. The function of network wind control is based on the correct understanding of data and data.

First, prevent confusion between general data and big data. Large amounts of data are not big data, and only data that meets management usage requirements and market characteristics make up big data. The size of the data itself, but the size of the data using the pattern of the position. Messy data is the premise of big data, but the concept of risk management is to control the reins of big data, there is no goal, method and tool, the data is nothing but a mess. For example, in the network of micro-loans, the network provider provides the bank with the previous transaction data of the merchant, and the bank judges the merchant's credit rating from the transaction data of the merchant and decides to give the appropriate amount of loan. The bank selects the risk according to the risk Standard selection of a certain magnitude and nature of the data constitutes a network wind control method; when a certain type of customer or single customer default rate and loss rate increases, the bank will adjust the credit strategy to control credit to such customers Quota.

Second, the integrity of the data. Big data has the original meaning of integrity. From the perspective of risk management, the diversity of data, multi-dimensional, forming a picture of the overall situation close to the specific business information is the essential requirement of information symmetry. Risk management relies on information symmetry, information symmetry depends on information integrity, and information integrity requires comprehensive, multidimensional and diverse data. Under the Internet environment, the quality and function of different networks are precisely differentiated in data integrity and especially notable in risk management capabilities.

Third, the authenticity of the data. As the network provides various types of trading platform, the network should have the responsibility to provide real data. In the network crowdfunding business, if the intermediary network operators can not provide the real basic data for the investment projects provided, Will affect the investor's risk judgments and trade-offs, the formation of the network investment contract will also be contrary to the fair principle of civil contracts. On the one hand, network operators are responsible for the data they produce; on the other hand, they also have the responsibility to supervise the parties to the transaction and provide the counterparties with completely relevant data. The authenticity of the network data is the source of survival of the network, the fake massive data is not a resource but a hassle, so the authenticity of the data is the purification of the human environment of the network. If the authenticity of traditional financial accounts is the bottom line of the credit of financial institutions, then the authenticity of the network data is the bottom line for the application of all online transactions. Otherwise, the network will become a place where all kinds of risks are concentrated.

(C) take the network platform as the core, release the risk

The key of network risk control is who should be responsible for the integrity and authenticity of network data. The driving force of mitigation risk comes from which side of the transaction and who is the main body of management of network risks. This question, though simple, involves an old question, which is the sharing of responsibilities between the venue owner and the content implementer. For example, is it the responsibility of the writer or the editor to assume sole responsibility? Such as crowdfunding of such financing activities, as well as P2P services, network operators seem to play an intermediary role, but if you can not provide adequate risk tips and risk information expertise, but also does not assume the risk of failure to match the failure, the network eventually Will be reduced to financial brokers. For the trading platform, the network operators to provide financial products or other products, sales channels and trading platform if the transaction is not properly assumed the risk of loss of operational losses, it will lose the motivation to maintain compliance transactions.

Based on the principle of fair dealing, it is necessary to clarify the channels of civil legal remedies for various transactions. By the network operators to undertake intermediary and channel business of the first compensation liability, and then on behalf of the network operator claims to make up for losses, is a more reasonable and fair risk mitigation arrangements.

Therefore, as for the network financial activities, as the risk management subject and the responsibility subject, the network operator is feasible and fair in economic rights and civil law principles. In order to promote the management of online transaction risks, the online financial activities should be conducted in the following three conditions:

First, all items and products risk responsibility should be borne by the network operators.

Second, all payment accounts for online financial activities and product transactions should be entrusted to commercial banks or directly to commercial banks for payment of accounts.

Third, network operators and suppliers of financial products should work together to establish a compensation and reserve fund to ensure prior compensation for the losses resulting from the transaction.

The preconditions contained in the principles of wind control and civil law provide an effective and safe operating environment for online financial transactions, which is particularly important in the period of rapid financial Internet inflation. No one is responsible for the integrity and authenticity of the data, which will gradually degenerate the network into a wild barren field.

How to digest the network risks, hedging and sustained release, also need to be considered.

The classification of cyber risks is generally the same as that of entity risks. In cyber finance, there are also credit risks, operational risks and market risks related to transactions. As the network operators mainly act as intermediaries to match transactions and act as channels and trading platforms or channels, the credit risk, operational risk and market risk digest and slow release in the transaction are handled and borne by both parties of the transaction according to the principle of entity risk. However, the most prominent risks in online finance are the technical loopholes in the network and the moral hazard of operators as well as the transaction risk induced by asymmetric information and inauthentic information.

For network technology risks, a compensation system should be established. Internet companies engaging in online financial business should set up compensation funds and include their own risk costs.

Internet operators lose control of their customers caused by moral loss, Internet companies should pay compensation, and then recover the civil liability.

Loss of customer information loss due to distortion, the network company should bear the risk responsibility to pay the obligation. Therefore, Internet companies should follow the financial institutions to a certain ratio of all financial transactions to make payments, and included in the risk cost.

Establishing and perfecting the system of risk mitigation will enable Internet-based finance to truly become part of Huimin Finance and be healthy and regulated.

(The author is CITIC Group Chairman)