In a groundbreaking study, Haitong Wei and co-author Xinghai Wang have introduced a novel financial risk management early-warning model tailored for Chinese enterprises, published in the Journal of Risk and Financial Management. The research addresses a critical enterprise financial risk management gap by creating a comprehensive and universally applicable framework. Using financial data from A-share listed companies in 2020, the model categorizes enterprises into four risk levels—Grade A (significant risk), Grade B (moderate risk), Grade C (minor risk), and Grade D (no risk)—offering a clear and actionable structure for financial risk assessment.
Using a factor–logistic fusion algorithm, Wei’s model effectively resolves collinearity issues among financial risk indicators and delivers results in a probabilistic format, enhancing interpretability. By integrating data on profitability, solvency, operational capability, development potential, shareholders’ retained earnings, cash flow, and asset growth, the model achieves over 89% prediction accuracy. This innovative approach gives enterprises an essential tool to predict and mitigate financial crises, enabling improved decision-making and risk management in an increasingly competitive market environment.
Haitong Wei brings a unique blend of expertise in artificial intelligence, machine learning, and financial analysis to this research. A recipient of a master’s degree in Computer Science from Chonnam National University, Wei has been recognized as a Big Data Analytics Think Tank Expert by China’s Ministry of Industry and Information Technology. Currently serving as an Algorithm Scientist and President’s Assistant at Rongdao Zhibian Data Technology Group, Wei also contributes as a Special Lecturer and Expert Consultant for the China General Chamber of Commerce Data Analysis Committee. Wei’s diverse roles include Technical Expert at the Data Intelligence Branch of the Enterprise Financial Management Association of China and Assistant to the Director of the Expert Committee of the ESG Research Institute at Northwest University of Political Science and Law.
Wei’s contributions extend beyond academia and industry, including involvement in Huawei’s openEuler open-source community and receiving the “2021 Outstanding Contribution Award for China’s Industrial Research and Development” from Wisdom China magazine. These accolades underscore Wei’s commitment to advancing financial and technological innovation.
This latest study aims to redefine financial risk management in China by offering enterprises a scientifically robust, highly interpretable, and practically applicable early-warning model. It emphasizes the importance of proactive risk assessment in safeguarding operational stability and long-term growth.
Read the full paper on Journal of Risk and Financial Management for more information on this research.